Monoetronic is a monopolist selling wireless glucose monitors for patients with diabetes. Suppose its marginal cost is $200. Suppose its inverse demand curve in the U.S. is

p_a = 1,500 – 2q_a

and the inverse demand curve in Canada is

p_c = 1,000 – q_c

Assume that Canadian customers cannot buy Monoetronic’s wireless glucose monitors from the American market (i.e., resale is impossible).

(a) What are the company’s profit-maximizing quantity and price in the U.S.? What are the profit-maximizing quantity and price in Canada?

(b) With profit-maximizing quantity and price you identify in (a), what is the elasticity of demand for wireless glucose monitors in each country? Which country has more elastic demand?Is price higher or lower in the country with more elastic demand?