A monopolist has a constant marginal cost of $2 per unit and no fixed costs. He faces separate markets in the United States and England. He can set one price p₁ for the U.S. market and another price p₂ for the English market. If demand in the United States is given by Q₁ = 6,000 - 600p₁ and demand in England is given by Q₂ = 2,400 - 400p₂, then the price in the United States will A) be larger than the price in England by $2. B) be smaller than the price in England by $2. C) equal the price in England. D) be larger than the price in England by $4. E) be smaller than the price in England by $4.

Question

Quizplus · Accepted Answer

The monopolist sets prices where marginal revenue equals marginal cost. The U.S. market has a higher demand elasticity, leading to a lower price compared to the English market.

A Monopolist Has a Constant Marginal Cost of $2 Per