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 profitmaximizing output in the foreign 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 profit­maximizing output in the foreign market?

Quizplus · Accepted Answer

To find the profit-maximizing output in the foreign market, set marginal revenue (MR) equal to marginal cost (MC). The demand curve in the foreign market is P = 160 - 2Q, so total revenue (TR) is TR = P * Q = (160 - 2Q)Q = 160Q - 2Q^2. The marginal revenue is the derivative of TR with respect to Q, MR = 160 - 4Q. Set MR = MC: 160 - 4Q = 20, solving gives Q = 35.

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