Please help with the following questions given the diagram below: The following

Question

Please help with the following questions given the diagram below:

The following shows the demands and marginal revenue in two markets, 1 and 2, for a price discriminating firm along with total marginal revenue, MRT, and marginal cost MC:

1}Compare the demand conditions in each market; i.e. how do the two markets differ in their demand for the firm’s product?

Select one:

a. Both markets have equivalent demand since MC is constant in both markets.

b. Market 1 has less demand than market 2. 1 is low demanders, 2 is high demanders.

c. Market 1 has more demand than market 2. 1 is high demanders, 2 is low demanders.

2)How much total output should the firm produce (for both markets combined)? (It would be easiest to copy and paste the picture above and draw directly on the picture using Insert, Shapes to do the next few questions.)

Select one:

a. 425 units

b. 250 units

c. 75 units

d. 225 units

3)How should that output be allocated between markets 1 and 2?

Select one:

a. 125 units in market 1; ?180 units in market 2

b. 225 units in market 1; 250 units in market 2

c. 150 units in market 1; ?310 units in market 2

d. 75 units in market 1; 150 units in market 2

4)What price should the firm charge in each market?

Select one:

a. $20 in both markets

b. ?$27.50 in market 1; $35 in market 2

c. ?$22.50 in market 1; ?$32 in market 2

d. ?$27.50 in both markets

Explanation / Answer

1) b. Market 1 has less demand than market 2. 1 is low demanders, 2 is high demanders.

2) d. 225 units

3) d. 75 units in market 1; 150 units in market 2

4) b. $27.50 in market 1; $35 in market 2

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects