Say a monopolist sells in two separate markets, with demand PA = 100 - 2Q and PB = 50 - Q respectively. Marginal costs in both markets are constant and equal to 8. The profit maximizing quantity of output in market A would be
A)46.
B)23.
C)21.
D)5.

Question

Quizplus · Accepted Answer

To find the profit maximizing output in market A, we need to determine the monopolist's marginal revenue and set it equal to marginal cost.

In market A, the monopolist's total revenue is given by TR = P(Q)Q = (100 - 2Q)Q = 100Q - 2Q^2.

Taking the derivative of TR with respect to Q, we get MR = 100 - 4Q.

Setting MR equal to the constant marginal cost of 8, we get:

100 - 4Q = 8

Solving for Q, we get Q = 23.

Therefore, the profit maximizing output in market A is 23.

Say a Monopolist Sells in Two Separate Markets, with Demand