Suppose demand in Domestic is given by the linear market demand curve P-80-Q. Domestic autarkic and served by a monopolist with constant marginal cost MC-S1, total variable costs of TVC-ax Q, and no fixed costs. The world price is PW, Domestic is able to set an import quota, M, or use a tariff, r. 2.1 What is the monopolist's profit in autarky? (Hint: derive marginal revenue first) Suppose Domestic opens up to trade with PW-10 2.2 What is the monopolist's profit when 70 and there is no quota? 2.3 What is the monopolist profit when M-20 and there is no tariff? 2.4 Which situation does the monopolist prefer? 1 When r 0 and there is no quota. 2 When M 20 and there is no tariff.

Suppose demand in Domestic is given by the linear market demand curve P-80-Q. Domestic autarkic and served by a monopolist with constant marginal cost MC-S1, total variable costs of TVC-ax Q, and no fixed costs. The world price is PW, Domestic is able to set an import quota, M, or use a tariff, r. 2.1 What is the monopolist's profit in autarky? (Hint: derive marginal revenue first) Suppose Domestic opens up to trade with PW-10 2.2 What is the monopolist's profit when 70 and there is no quota? 2.3 What is the monopolist profit when M-20 and there is no tariff? 2.4 Which situation does the monopolist prefer? 1 When r 0 and there is no quota. 2 When M 20 and there is no tariff.

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

All 4 parts answer need.

international economics
2.1:
2.2:
2.3:
2.4:
Suppose demand in Domestic is given by the linear market demand curve P= 80-Q. Domestic
autarkic and served by a monopolist with constant marginal cost MC Sn₁, total variable costs
of TVC a₁ x Q, and no fixed costs. The world price is pw. Domestic is able to set an import
quota, M, or use a tariff, 7.
2.1 What is the monopolist's profit in autarky? (Hint: derive marginal revenue first)
Suppose Domestic opens up to trade with PW = 10.
2.2 What is the monopolist's profit when 70 and there is no quota?
2.3 What is the monopolist profit when M 20 and there is no tariff?
2.4 Which situation does the monopolist prefer?
1 When 7-0 and there is no quota.
2 When M-20 and there is no tariff.
X₁
15
(please round to 3 decimals; the system will mark answers within 10.1 as correct)
(please round to 3 decimals; the system will mark answers within 10.1 as correct)
(please round to 3 decimals; the system will mark answers within 10.1 as correct)
(please write 1 or 2)
this is the answer section. pleade solve asap

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Step 2: 2.1. Determine monopolist profit at autarky

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Step 3: b. Determine profit at 0 tariff and no quota

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Step 4: c. Determine the profit with import quota of 20

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Step 5: d. Determine the choice of the monopolist

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