Question
6. Suppose a monopolist's domestic market is protected from import competition. Its domestic demand curve is Pd = 120 qd / 10. An enterprise can
6. Suppose a monopolist's domestic market is protected from import competition. Its domestic demand curve is Pd = 120 qd / 10. An enterprise can also export to a more competitive world market, where the price is Pe = 80 regardless of the export volume qe, that is, the enterprise is a "price recipient" in the world market. Therefore, the products of the enterprise are sold in two markets at home and abroad, namely Q = qd + qe. If the marginal cost of the enterprise is MC = 50 + Q / 10, find:
(1) The total output of maximizing enterprise profits and the distribution in domestic and foreign markets;
(2) Compare the price and demand elasticity of domestic market and world market.
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