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The production of an online video game has very high xed costs of $1 million, but relatively low marginal costs of $0.10. A monopolist selling
The production of an online video game has very high xed costs of $1 million, but relatively low marginal costs of $0.10. A monopolist selling the game in the United States charges the protmaximizing price of $5.10 and sells 180,000 units. Will the monopolist be able to stay in business if he sells only in the United States? Why or why not? O Yes, because his revenue exceeds his costs. O No, because his costs exceed his revenue. 0 Yes, but he needs to raise his price to make more money. O Yes, but he needs to lower his price to sell more and make more money. P The monopolist also sells the game in New Zealand. He faces no additional xed costs, but shipping adds $0.50 per unit to the marginal cost. The prot-maximizing price is $1.60, at which he sells 150,000 units in New Zealand. 3 A law is proposed in the United States that would outlaw the practice of rms charging higher prices domestically than the same ; rms charge abroad. The monopolist would have the choice of producing only in the Unites States, charging $5.10 per unit for I 180,000 units, or charging the protmaximizing price for the combined markets, $4.60, and selling 195,000 units in the United I States and 20,000 units in New Zealand. How would this law affect American consumers and consumers in New Zealand, respectively? 0 better off, better off 0 worse off, better off 0 worse off, worse off
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