Problem: Firm A has no costs of production and sells its production in two buyers. Buyer 1's demand function is
p1 = 90 - 10y1
and Buyer 2's demand function is
p2 = 60 - 5y2
Assuming that the firm can engage in ordinary price discrimination, find the profit maximizing prices.
What is firm A's profit?
Now suppose that the firm cannot price-discriminate.
First find the firms aggregate demand function.
Then find its marginal revenue function.
Find its profit maximizing price, and compute its profit.