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Consider a monopolist which faces the following demand curves for its product in the export market A and the domestic market B. Inverse demand curve
Consider a monopolist which faces the following demand curves for its product in the export market A and the domestic market B. Inverse demand curve in the export market: QA = 360 2pA Inverse demand curve in the domestic market: 03 = 200 pB where p: and Q: denote price and quantity sold in market i where i = A, B. The monopolist's cost function is given b: C(Q) = 0.250!2 where Q = QA + QB. Assume that resale between the two markets is not possible and the monopolist maximizes profits. (a) (3 marks) Find pA and p3 that maximizes monopolist's profits
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