A monopoly sells its product in both the U.S. and Japanese markets. The American inverse demand function is Pus = 100 – Qus, and the Japanese inverse demand function is P, = 80 – Q. Pus and P, are both measured in dollars. The firm's marginal cost is MC = 20 in both countries. 1. Suppose the company can prevent resales between these two countries. In order to maximize its profit, what prices should the monopoly firm charge in the two markets?

A monopoly sells its product in both the U.S. and Japanese markets. The American inverse demand function is Pus = 100 – Qus, and the Japanese inverse demand function is P, = 80 – Q. Pus and P, are both measured in dollars. The firm's marginal cost is MC = 20 in both countries. 1. Suppose the company can prevent resales between these two countries. In order to maximize its profit, what prices should the monopoly firm charge in the two markets?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter16: Government Regulation

Section: Chapter Questions

Problem 10E

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