Question
4. A monopolist produces a single good. Assume that there are two markets for that good: the countries of Aberia and Betania. The demand for
4. A monopolist produces a single good. Assume that there are two markets for that good: the countries of Aberia and Betania. The demand for the good in Aberia is QA = 60 PA and in Betania it is QB = 40 PB . The monopolist has no fixed costs and can produce any amount of the good at a constant marginal cost of $8. (c) If the monopolist cannot set different prices in the two markets (i.e. PA = PB ), what single profit-maximising price would it set? (d) Answer the same question as in part (c) but assuming that the monopolist's constant marginal cost is $28.
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