Estimate the output, price, profits in each market with and without price discrimination.
Consider a monopoly with a cost function of C=(Q) = 10 + 2Q + Q2) Its output is sold to two different markets: US and Europe with the subsequent demand functions.
P = 20-Q
Europe: P = 50-Q
Compute the QUS*, QEurope*, PUS*, PEurope*,π US*, and π Europe* if
i) the monopoly cannot separate the market and practice price discrimination.
ii) the monopoly can separate the market and practice price discrimination.