Citadelle , the Québec maple syrup producer, sells its syrup in Canada and in the United States. The demand in Canada is given by P = 36 – Q CA , where P is the price ($ per litre) and Q CA is the quantity demanded (thousands of litres per year ). The demand in the United States is given by P = 40 – Q US , where P is the price ($ per litre) and Q US is the quantity demanded (thousands of litres per year ). The cost function is C = 400,000 + 5Q, where C is the total cost (in $ per year) and Q is the total quantity produ ced ( l itres per year). Use these to answer questions 11 – 21 .
Suppose Citadelle cannot price discriminate.
11. Find the profit – maximizing quantity (in thousands of litres per year) .
12. Find the profit – maximizing price (in $ per litre) .
13. Calculate the consumer surplus (in thousands of $ per year) .
14. Calculate the profits (in thousands of $ per year) .
Suppose Citadelle can practice the third – degree price discrimination.
15. Find the profit – maximizing quantity in Canada (in thousands of litres per year) .
16. Find the profit – maximizing price in Canada (in $ per litre) .
17. Find the profit – maximizing quantity in the United States (in thousands of litres per year) .
18. Find the profit – maximizing price in the United States (in $ per litre) .
19. Calculate the combined consu mer surplus (in thousands of $ per year) .
20. Calculate the profits (in thousands of $ per year) .
21. Is the third – degree price discrimination more efficient than uniform pricing?
