Answered: A monopolist book publisher with a…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

A monopolist book publisher with a constant marginal cost of 2 and no fixed costs sells novels in only two countries. Assume the inverse demand curve in country 1 is given by

P1=10-2/3Q
and the inverse demand curve in country 2 is given by
PW=18-Q

Assuming book shipments across countries are banned so that price discrimination occurs. What is the equilibrium price and quantity of books sold by the monopolist in country 1?
Options are:
a)p=1, q=16
b) p=1 q=12
c) p=4, q=8
d)p=6, q=6

Continuing to assume price discrimination, what is the equilibrium price and quantity of books sold by the monopolist in country 2?
a)p= 4,q=14
b)p= 6,q=12
c)p= 8,q=10
d)p= 10,q=8

If book imports are permitted in both countries so that price discrimination is impossible, what is the equilibrium price and quantity sold in the two countries combined?
a)p=6,q=20
b)p=7,q=20
c)p=10,q=8
d)p=12,q=6

Definition Video Definition Point where the demand and supply curves intersect. At the equilibrium price the quantity supplied of a good is equal to the quantity demanded. When the market is not in equilibrium, market surplus or market shortage occurs. The region that is above the price equilibrium indicates market surplus and the region below the price equilibrium indicates market shortage. Video

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