The demand functions faced by a firm in two different markets are: Q1 = 600 – 10 p1 and Q2 = 800 – 10 p2. The firm has constant marginal costs of production equal to $20.
-Write the profit function
-Find the optimal prices and output if the firm price discriminate in the third degree.
-Calculate the price elasticities of the demand in both markets.
-Find the optimal price under uniform pricing (ie. Set the same price in both markets)