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Part I: The Acosta company has monopoly power in two countries, home and foreign. At home, it faces a demand curve given by Q=1-P In
Part I: The Acosta company has monopoly power in two countries, home and foreign. At home, it faces a demand curve given by Q=1-P In the foreign country, demand is given by Q' =4/3 - 2/3r" Acosta's cost function is given by 2.y (_': sy 3 ) SQ Assuming that price differentiation is available, determine the monopoly price set. by Acosta in each country. Determine Acosta's total revenue, cost and profit for each country, as well as the combined profit (home plus foreign country profit). Now assume that Acosta is not allowed to price differentiate. Instead, it is forced to set a uniform price for the two countries. Determine this uniform price as well as Acosta's corresponding total revenue, cost and profit for each country. Finally, calculate the combined profit (home plus foreign country profit) in the case of a uniform price. Compare the findings with and without price differentiation. Give a short interpretation of your results
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