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Consider two markets in both of which there is just one firm that acts as a monopolist. In market A the demand function is the
Consider two markets in both of which there is just one firm that acts as a monopolist. In market A the demand function is the following: Q=90-5P, and the market clearing price and quantity are, respectively, P*=13; Q*=52 In market B the demand function is the following: Q=50-7P, and the market clearing price and quantity are, respectively, P*=28; Q*=140
In which of the two markets will the Profit-maximizing monopolist have the highest pricecost margin? Does this match with your expectations? Explain your answer.
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