A monopolist is deciding how to allocate output between two geographically separated markets (East Coast and Midwest). Demand and marginal revenue for the two markets are: Upper P 1 equals 20 minus Upper Q 1P1=20−Q1 MR 1 equals 20 minus 2 Upper Q 1MR1=20−2Q1 Upper P 2 equals 30 minus 2 Upper Q 2P2=30−2Q2 MR 2 equals 30 minus 4 Upper Q 2MR2=30−4Q2 The monopolist's total cost is Upper C equals 5 plus 5 (Upper Q 1 plus Upper Q 2 )C=5+5Q1+Q2.

You are in the market for a new refrigerator for your company’s lounge, and you have narrowed the search down to two models. the energy efficient model sells for $700 and will save you $45 at the end of each of the next five years in electricity costs. the standard model has features similar to the energy efficient model but provides no future saving in electricity costs. it is priced at only $500. assuming your opportunity cost of funds is 6 percent, which refrigerator should you purchase