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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 2 P₁ = 10-30 and the inverse demand curve in country 2 is given by P2 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? Continuing to assume price discrimination, what is the equilibrium price and quantity of books sold by the monopolist in country 2? 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? P-1, Q-16 P.1, Q.12 P-4, Q-8 P.6, Q6 P-4, Q=14 P.6, Q=12 P-8, Q-10 P.10, Q.8 P=6, Q=20 P.7, Q=20 P10, Q=8 D-12 0.6

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 2 P₁ = 10-30 and the inverse demand curve in country 2 is given by P2 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? Continuing to assume price discrimination, what is the equilibrium price and quantity of books sold by the monopolist in country 2? 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? P-1, Q-16 P.1, Q.12 P-4, Q-8 P.6, Q6 P-4, Q=14 P.6, Q=12 P-8, Q-10 P.10, Q.8 P=6, Q=20 P.7, Q=20 P10, Q=8 D-12 0.6

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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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-Q and the inverse demand curve in country 2 is given by P₂ = 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? Continuing to assume price discrimination, what is the equilibrium price and quantity of books sold by the monopolist in country 2? 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? P=1, Q=16 P=1, Q=12 P=4, Q=8 11 P=6, Q=6 P=4. Q=14 P=6, Q=12 P=8, Q=10 P=10, Q=8 P=6, Q=20 P=7, Q=20 P=10, Q=8 P=12, Q=6
Transcribed Image Text: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-Q and the inverse demand curve in country 2 is given by P₂ = 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? Continuing to assume price discrimination, what is the equilibrium price and quantity of books sold by the monopolist in country 2? 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? P=1, Q=16 P=1, Q=12 P=4, Q=8 11 P=6, Q=6 P=4. Q=14 P=6, Q=12 P=8, Q=10 P=10, Q=8 P=6, Q=20 P=7, Q=20 P=10, Q=8 P=12, Q=6
Expert Solution
Step 1

Given 

The marginal cost of a book =2

Fixed cost =0.

The inverse demand for books in country 1 is p1=10-23Q               .......(1)

The inverse demand for books in country 2 is p2=18-Q                    .....(2)

The profit maximization condition for monopolists is marginal revenue is equal to marginal cost. 

 

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