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October 27, 2021

Consider a monopolistic firm selling the same product in two completely separate markets with the following demand

Business & Finance /Economics

Consider a monopolistic firm selling the same product in two completely separate markets with the following demand schedules:

Quantity (Q1) 0 1 2 3 4 5 6 7 8

Price (P1) 24 21 18 15 12 9 6 3 0

Quantity (Q2) 0 1 2 3 4 5 6 7 8

Price (P2) 8 7 6 5 4 3 2 1 0

The marginal cost of this firm is equal to its average total cost and is constant at $3 per unit produced (note that this also means that there are no fixed costs). Based on this information use excel to calculate marginal revenues and set up a diagram that shows the demand and the marginal revenue curves of this firm as well as the quantities and prices it should charge in each market in order to maximize overall profits from the two markets. Make sure that you include the total profit as a part of your answer.

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