Answer to Question #342263 in Financial Math for mukti

Question

A firm has the possibility of charging different prices in its domestic and foreign markets. The corresponding demand equations are given below by

Q1=300-P1

Q2= 400-2P2

The total cost function is

TC= 5000+100Q

Where Q=Q1+Q2

Determine the priced (in dollers) that the firm should charge to maximise profits

a) with price discrimination

b) without price discrimination

Compare tge profits obtained in parts (a) and (b)

c) What will be the effect of a tax of 8 taka per unit output on the optimal quantity, price and profits for the firm, assuming there is no price discrimination?

Answer 1

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