Thread: Monopoly Questions

A monopoly sells in 2 separate markets. The demand functions are and with a constant variable cost of $10.

1. Suppose the monopoly were forced to charge 1 single price. What is the optimal price?
2. Suppose the monopoly can perfectly discriminate in both markets, calculate the profit for both market.

1. Should i combine both demand functions into one? So Q=240-3P?
2. For each market, should i set price = mc? so and ?

Thanks in advance

Be careful how you combine the demand functions in the first question. only when , otherwise . Therefore, your combined demand function is only valid for .

Remember you don't want to set price equal to marginal cost, you want to set marginal revenue equal to marginal cost.