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The Kentucky Pride Distillers make and distribute a premium-grade whiskey in two distinct markets, one in the Midwest and one in the South. Estimated demand functions in the two markets are Q1 = 150 - P1 Q2 = 200 - 2P2 while unit cost is ATC = 30 + 0.2Q where ATC is the firm's average total cost per six-bottle case (in dollars); Q is the firm's monthly output4 Q1 and Q2 - quantities demanded, in six-bottle cases; P1 and P2 - price per case.

 Assume that third-degree price discrimination is possible. Then find:

o The profit-maximizing sales level and price for each market.

o The maximum profit for the firm. o The price elasticity of demand for each market at optimum sales level.

 What is the firm's monthly output?

Econometrics, Economics

  • Category:- Econometrics
  • Reference No.:- M9690296

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