(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 per unit in the home market?

Question

Quizplus · Accepted Answer

The monopolist maximizes profit where MR = MC. In the home market, MR = 200 - 2Q = 20, solving gives Q = 90. The price is P = 200 - 90 = 110. Profit per unit is P - MC = 110 - 20 = $90.

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