QUESTION
Suppose the demand curves in two different markets are given by: Q_1=24 – P_1 and Q_2=24 – 2P_2and that a monopoly can serve both of these markets at a constant marginal cost of $6.a) If the monopoly canât separate both markets, then what would be the equilibrium price and quantity? Explain.b) Does the firm make a profit? If yes, how much is it? Explain.c) If the monopoly can separate both markets, then what type of price discrimination would the firm use? Explain.d) If the monopoly can separate both markets, then what would be the equilibrium price and quantity? Explain.e) Does the firm make a profit with price discrimination? If yes, how much is it? Explain.f) Should the firm practice price discrimination? Why/Why not?Please give detailed explanations as the economic intuition behind it is what I struggle the most with. Thank you.
ANSWER:
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