SCENARIO: DISCRIMINATING MONOPOLIST
The demand curve in its home market is P = 200 - Q; the demand
Curve in its foreign market is P = 160 - 2Q; and its marginal cost is a
Constant $20 per unit.
Reference: Ref 99
(Scenario: Discriminating Monopolist) What is the discriminating
Monopolist's profit maximizing output in the domestic market?

Question

SCENARIO: DISCRIMINATING MONOPOLIST
The demand curve in its home market is P = 200 - Q; the demand
Curve in its foreign market is P = 160 - 2Q; and its marginal cost is a
Constant $20 per unit.
Reference: Ref 9­9
(Scenario: Discriminating Monopolist) What is the discriminating
Monopolist's profit­ maximizing output in the domestic market?

Quizplus · Accepted Answer

To find the profit-maximizing output, set marginal revenue (MR) equal to marginal cost (MC). For the domestic market, the demand curve is P = 200 - Q. The MR curve is derived as MR = 200 - 2Q. Setting MR = MC gives 200 - 2Q = 20, solving for Q gives Q = 90.

SCENARIO: DISCRIMINATING MONOPOLIST The Demand Curve in Its Home Market Is P =