Consider a monopolist firm serving two markets. Demand in market 1 is given by p1=120−1
2 q1. Demand in
market 2 is given by p2=90−q2. The monopolist has a cost function given by C(q) = 12(q1+q2).
If the firm can keep the two markets separated, what price will it charge in each market? How many
units of the good will it sell in each market? What are the resulting consumer surpluses, producer
surpluses, and dead weight losses in each market?