Calculate the profit maximising price, Microeconomics

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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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