7. Suppose that the discriminating monopolist has the demand functions
P_{1} = 200 - 2Q_{1}; P_{2} = 180 - 4Q_{2} and that the cost function is C = 20(Q_{1} + Q_{2}) .
a) How much should be sold in the 2 markets to maximise profits?
b) What are the corresponding prices?
c) How much profit is lost if it becomes illegal to discriminate?
12 marks]
12 marks]
16 marks]
d) Discuss the consequences of the imposition of a tax of 5 per unit sold in market 1 by
