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The monopolist also sells the game in New Zealand. He faces no additional fixed costs, but shipping adds $0.50 per unit to the marginal cost.
The monopolist also sells the game in New Zealand. He faces no additional fixed costs, but shipping adds $0.50 per unit to the marginal cost. The profit-maximizing price is $1.60, at which he sells 150,000 units in New Zealand. A law is proposed in the US that would outlaw the practice of firms charging higher prices domestically than the same firms charge abroad. The monopolist would have the choice of producing only the US, charging $5.10 per unit for 180,000 units, or charging the profit-maximizing price for the combined markets,$4.60, and selling 195,000 units in the US and 20,000 units in New Zealand. How would this law affect American consumers and consumers in New Zealand, respectively
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