The following table shows the marginal revenues earned by a price discriminating monopolist from two different markets. Table 10.5
Refer to Table 10.5.If marginal cost is $30 in both markets, what quantities will be supplied in each of the markets?

Question

The following table shows the marginal revenues earned by a price discriminating monopolist from two different markets. Table 10.5
 Refer to Table 10.5.If marginal cost is $30 in both markets, what quantities will be supplied in each of the markets?

Quizplus · Accepted Answer

To determine the quantities that will be supplied in each market, we need to find the profit-maximizing quantity in each market, which occurs where marginal revenue equals marginal cost.

In market X, the marginal revenue is highest at a quantity of 3 units, where MR=X(30-0.5X) = 45. At a marginal cost of $30, the monopolist will produce 3 units in market X.

In market Y, the marginal revenue is highest at a quantity of 3 units, where MR = X(80-2X) = 40. At a marginal cost of $30, the monopolist will produce 3 units in market Y.

Therefore, the total quantity produced is 3+3=6 units.

The Following Table Shows the Marginal Revenues Earned by a Price