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You have been hired as a consultant by a firm producing bread to advise on a pricing strategy that would enable the firm to maximize profits....

      

You have been hired as a consultant by a firm producing bread to advise on a pricing strategy that would
enable the firm to maximize profits. This firm is a monopolist which sells in two distinct markets, one of
which is completely sealed off from the other.
As part of the analysis, you establish that the total demand for the firm‟s output is given by the
following equation:
Q = 50 – 0.5P
and the demand for the firm‟s output in the two markets is given by the following equations:
Q1 = 32 – 0.4P1 and
Q2 = 18 – 0.1 P2

Where: Q = total output
P = Price
Q1 = Output sold in Market 1
Q2 = Output sold in Market 2
P1 = Price charged in Market 1
P2 = Price charged in Market 2

The cost of production is given by C = 50 + 40Q
Where C = total cost of producing bread.

Determine the total output that the firm must produce in order to maximize profits.

  

Answers


Wilfred
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Wilfykil answered the question on February 7, 2019 at 05:33


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