A profit-maximizing monopolist sells its goods to two different countries. In one country it faces demand as p1 180 – 2q2. Its marginal cost is 2qi. If the monopoly were to charge different prices in these markets, in which market it can charge a higher price, explain using elasticity. Calculate CS, PS, and DWL. What would be the price if the firm were to = 120 q1 and in other country it faces demand as P2 charge one price for both markets.

A profit-maximizing monopolist sells its goods to two different countries. In one country it faces demand as p1 180 – 2q2. Its marginal cost is 2qi. If the monopoly were to charge different prices in these markets, in which market it can charge a higher price, explain using elasticity. Calculate CS, PS, and DWL. What would be the price if the firm were to = 120 q1 and in other country it faces demand as P2 charge one price for both markets.

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 profit-maximizing monopolist sells its goods to two different countries. In one
country it faces demand as p1
180 – 2q2. Its marginal cost is 2qi. If the monopoly were to charge different
prices in these markets, in which market it can charge a higher price, explain using
elasticity. Calculate CS, PS, and DWL. What would be the price if the firm were to
120 – q, and in other country it faces demand as
P2
charge one price for both markets.

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