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Please answer the question providing a step by step analysis on how to answer both parts of the question ACME is a monopolist in the
Please answer the question providing a step by step analysis on how to answer both parts of the question
ACME is a monopolist in the production of widgets in two islands, Blefuscu and Liliput. Demand for widgets in Blefuscu is QB(P) = 400 P, and the demand in Liliput is QL(P) = 4000 100P. ACME's production cost is C(Q) = (1/ 18)Q2, where Q is ACME'S total output. a) A recent ruling by the antitrust authority forbids ACME to charge different prices at each island. \\Vhat would be ACME's profits then? b) Dr Gulliver offers ACME a technology that would allow the firm to perfectly price discriminate across units. So, although it is still true that ACME will not be able to charge different prices across countries, it will be able to charge different prices per unit. How much would ACME be willing to pay Dr Gulliver for his inventionStep by Step Solution
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