1. 1. 6 A monopoly that sells internationally will often try to sell its product at different prices in different countries.

Consider distributors for a monopoly that are located in two countries that are adjacent to each other. The inverse demand curves in the two countries are p1

=

40 - 2Q1 and p2

= 1,000 - Q2

. For simplicity, the monopoly’s marginal cost is constant at MC = 20.

472 CHAPTER 12 Pricing and Advertising What is the profit-maximizing price and quantity in each country? Will the monopolist necessarily be able to sell its output at those prices if shipping costs between the two countries are low? Explain.