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The demand functions faced by a firm in two different markets are: Q1 = 600 – 10 p1 and Q2 = 800 – 10 p2. The firm has constant marginal costs of production equal to $20.
-Write the profit function
-Find the optimal prices and output if the firm price discriminate in the third degree.
-Calculate the price elasticities of the demand in both markets.
-Find the optimal price under uniform pricing (ie. Set the same price in both markets)
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Suppose, as in the federal income tax code for the United States, that the representative consumer faces a wage income tax with a standard deduction. determine the effects of this tax change on the consumer, and explain your results in terms of incom..
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