(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 foreign market?

Question

Quizplus · Accepted Answer

To find the profit-maximizing output in the foreign market for a discriminating monopolist, we set the marginal revenue (MR) equal to the marginal cost (MC). In the foreign market, MR = 160 - 4Q and MC = $20. Setting them equal gives: 160 - 4Q = 20. Solving for Q, we subtract 20 from both sides to get 140 = 4Q, and then divide by 4 to find Q = 35.

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