Business, 21.03.2020 12:00 BonnyRios

1. This is a continuation of question 2 from HW 5. You are the sole publisher of "Managerial Economics Made Easy", a wonderful textbook that has a high demand because it really does make economics easy. Because you own the copyright you have a monopoly. You have estimated the demand for your textbook to be: Q = 1,200 – 4P, where Q is in thousands. Your cost function is TC = 6,000 + 60Q + 0.75Q2

In HW 5 you discovered that you should sell 80 copies, and could make profits of $4,400.

Now assume you are able to price discriminate. You have two separate markets for your textbook, call them 1 and 2. You have estimated the two market demands as:
Market 1: Q1 = 360 - 1.6P, Market 2: Q2 = 440 -2.4P2

Use this information to find profit maximizing prices and output, and profits.

Total Output =_ Market 1: Quantity Price = $

Market 2: Quantity Price = $. Profits = $

The elasticity of demand is in market 1 and in market 2. As expected the price is (higher, lower) in the market with the most elastic demand.

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1. This is a continuation of question 2 from HW 5. You are the sole publisher of "Managerial Economi...

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