The following shows the demands and marginal revenue in two markets, 1 and 2, for a price discriminating firm along with total marginal revenue, MRT, and marginal cost MC.
a. Compare the demand conditions in each market; i.e. how do the two markets differ in their demand for the firm’s product?
b. How much total output should the firm produce (for both markets combined)? How should that output be allocated between markets 1 and 2? (It would be easiest to copy and paste the picture above and draw directly on the picture using Insert, Shapes to do parts b and c.)
c. What price should the firm charge in each market?