A monopolistic firm operates in two separate markets. No trade is ...

[jake]

A monopolistic firm operates in two separate markets. No trade is possible between market A and market B. The firm has calculated the demand functions for each market as follows:
 
  Market A p = 15 - Q; Market B p = 11 - Q
 
  The company estimates its total cost function to be TC = 4Q. Calculate:
  a. quantity, total revenue and profit when the company maximizes its profit and charges the same price in both markets
  b. quantity, total revenue and profit when the company charges different prices in each market and maximizes its total profit

Question 2

Because the labor supply curve for a monopsonist is upward sloping, the monopsonist
 
  A) hires zero units of labor.
  B) chooses the perfectly competitive quantity of labor.
  C) must increase the wage to attract more units of labor.
  D) must take the wage as given by the market.

[itsakadoozi]

Answer to Question 1

If revenue and cost schedules are calculated:
a. Q = 9; p = 8.5; TR = 76.5; TC = 36; profit = 40.5
b. Market A:
Q = 5 to 6; p = 9 to 10; TR = 50 to 54; TC = 20 to 24; profit = 30
Market B:
Q = 3 to 4; p = 7 to 8; TR = 24 to 28; TC = 12 to 16; profit = 12
Combined profit = 42

If equations are used:
a. Q = 9; p = 8.5; TR = 76.5; TC = 36; profit = 40.5
b. Market A:
Q = 5.5; p = 9.5; TR = 52.25; TC = 22; profit = 30.25
Market B:
Q = 3.5; p = 7.5; TR = 26.25; TC = 14; profit = 12.25
Combined profit = 42.5

Answer to Question 2

C

[jake]

Thank you

[itsakadoozi]

No problemo