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ECON90015gerial Economics
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There are four pages in the exam (including this page).
There are six questions worth a total of 100 marks. (Marks are in brackets). Attempt all
questions.
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in your answer.
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ECON90015 2022 Exam
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1. Suppose the market demand for a good is = 120 − 0.5. The monopolist (total) cost
function is = 20.
a. Find the single-price monopolist’s profit-maximizing output, price, and profit. (6
marks)
b. Suppose the monopolist identifies two groups of customers that make up its
demand. The first group, as a whole, has demand 1 = 60 − 0.11. The second
group, as whole, has demand 2 = 60 − 0.42. The monopolist is able to charge a
separate price to each group but the price of each unit for a group is the same for
every unit. (There is also no two-part pricing). Find the price-discriminating
monopolist’s profit-maximizing outputs, prices, and total monopoly profit. (6 marks)
c. What rule does the monopolist use to decide which group pays the lower price for
the good? Show that this rule is satisfied here. (6 marks)