Answer Happy

A producer has the possibility of discriminating between the domestic and foreign market for a product where the demands respectively are: Q₁ = 20 -0.2P₁ Q2 = 13.5 -0.25P2 Total cost=45+30Q, where Q= Q₁+Q₂ a) What price will the producer charge in order to maximize profits? With discrimination between i) markets ii) Without discrimination between markets. b) Compare the profit differential between discrimination and non-discrimination. Round all intermediate and final answers to the nearest cent, 2 d.p. i) Market 1 Q₁-20-0.2P₁ 1. TR₁= 100 Q₁- 5 Q₁² Market 2 Q2-13.5-0.25P2 TR₂= 54 4 st Q₂-
2. MR₁= 100 10 Q₁ 3. MC= 30 4. Q₁= 7 5. P₁=$ 65 6. TR1MAX= $ 455 7. TC=$ 345 MR₂= 54 8 00 1 Q₂ MC= 30 Q₂ = 3 x P₂=$ 30 TR2MAX= $ 90 x SAME
8. Combined TRmax= $ SAME 545 X TPmax=$ 200 x ii) Without price discrimination: Use fractions in reduced form, if not terminating decimals. Q= 33.5 0.45 ✔P can use decimals P= 670/9 20/9 Q use fractions in reduced form 1.TR= 670/9 20/9 Q²
2.MR= 670/9 40/9 Q 3. MC= 30 4. Q= 10 5. P=$ 52 Xround to the nearest cent 6. TRmax=$ 522 Xround to the nearest cent 7. TC=$ 345 8. TPmax=$ 177 xround to the nearest cent
b) Compare the profit differential between discrimination and non-discrimination. Round all intermediate and final answers to the nearest cent, 2 d.p Profit differential between discrimination and non- discrimination: $ X