(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. Its marginal revenue in the home market is MR =200 - 2Q and is MR = 160 - 4Q in the foreign market. What is the discriminating monopolist's profit-maximizing output in the domestic market?

Question

Quizplus · Accepted Answer

To find the profit-maximizing output in the domestic market, set the marginal revenue (MR) equal to the marginal cost (MC). In the home market, MR = 200 - 2Q and MC = $20. Setting them equal gives 200 - 2Q = 20, which simplifies to 180 = 2Q, or Q = 90.

(Scenario: Discriminating Monopolist) the Demand Curve in Its Home Market