Assume a monopolist is producing and selling some good in two geographically distant countries. ( i.e...
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Assume a monopolist is producing and selling some good in two geographically distant countries. ( i.e resale and arbitrage are impossible) Firm's Cost: C(q)= 5q Demand in the 1st Country: P=20-5q Demand in the 2nd Country: P=30-3q a) Find the prices in these two markets that maximize the monopolist's total profit? b) In which country is the price higher? Explain why. c) Suppose the monopolist must charge a uniform price across the countries. How would its profits change? Assume a monopolist is producing and selling some good in two geographically distant countries. ( i.e resale and arbitrage are impossible) Firm's Cost: C(q)= 5q Demand in the 1st Country: P=20-5q Demand in the 2nd Country: P=30-3q a) Find the prices in these two markets that maximize the monopolist's total profit? b) In which country is the price higher? Explain why. c) Suppose the monopolist must charge a uniform price across the countries. How would its profits change?
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Answer rating: 100% (QA)
a To find the prices that maximize the monopolists total profit we need to set the marginal revenue in each country equal to the marginal cost of prod... View the full answer
Related Book For
Managerial Economics A Problem Solving Approach
ISBN: 978-1133951483
3rd edition
Authors: Luke M. Froeb, Brian T. McCann, Mikhael Shor, Michael R. War
Posted Date:
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