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Question:
(a) Assume a firm operates in one location but serves on two distinct markets, namely, 1 and 2. The demand functions are:
Market 1: P1 = 40 - 0.3 Q1 Market 2: P2 = 60 - 2 Q2
And, the total cost function is given as:
TC = 100 + 0.15 Q
Calculate the profit maximising price and output for each market.
(b) Diagrammatically describe part (a).
(c) Describe the conditions under which price discrimination is feasible.
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