A monopoly sells its good in the U.S. and Japanese markets. The American inverse demand function...

Question

Question

A monopoly sells its good in the U.S. and Japanese markets. The American inverse demand function is Pa = 100 - Qa and the Jap

business economics

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

This is an example of third degree price discrimination, where monopoly firm uses profit Maximizing condition (MR=MC) in each market and determine each market , profit Maximizing price and quantity.

For Japan market,

Pj=90-20j

TRj=90Qj-20Qj2

MRj=90-40Qj

MC=15

MR=MC

90-40Qj=15

75=40Qj

Qj=75/40=15/8=1.875

Pj=90-20*1.875=52.5

So EQUILIBRIUM price in Japan is 52.5

Add a comment

Answer 2

Similar Homework Help Questions

A monopoly sells its good in the U.S. and Japanese markets. The American inverse demand function...

A monopoly sells its good in the U.S. and Japanese markets. The American inverse demand function is: Pa=100-Qa and the Japanese inverse demand function is pj=90-2Qj where both prices, Pa and Pj, are measured in dollars. The firm's marginal cost of production is m = $25 in both countries. If the firm can prevent resales, what price will it charge in both markets? (Hint: The monopoly determines its optimal (monopoly) price in each country separately because customers cannot resell the...
A monopoly sells its good in the United States, where the elasticity of demand is negative...

A monopoly sells its good in the United States, where the elasticity of demand is negative −2, and in Japan, where the elasticity of demand is −5.4. Its marginal cost is 12. At what price does the monopoly sell its good in each country if resales are impossible? The price of the united states? The price of Japan? (Round your answer to the nearest penny.)
1. A restaurant faces very high demand for its signature mousse desserts in the evening but...

1. A restaurant faces very high demand for its signature mousse desserts in the evening but is less busy during the day. Its manager estimates that inverse demand functions are pe = 34 - Qe in the evening and pd = 24 - Qd during the day, where e and d denote evening and daytime. The marginal cost of producing its dessert evening, MCe, is $8. The marginal cost of producing its dessert daytime, MCd, is $4. There is no...

PART 2 The price in Japan is ___? A monopoly sells its good in the United...

PART 2 The price in Japan is ___? A monopoly sells its good in the United States, where the elasticity of demand is - 2.1, and in Japan, where the elasticity of demand is -5.2. Its marginal cost is $11. At what price does the monopoly sell its good in each country if resales are impossible? The price in the United States is $ . (Round your answer to the nearest penny.)
A monopoly sells its good in the United States, where the elasticity of demand is -2,...

A monopoly sells its good in the United States, where the elasticity of demand is -2, and in Japan, where the elasticity of demand is -5. Its marginal cost is $10. At what price does the monopoly sell its good in each country if resale is impossible?
4. (Aggregating Demand Curves and finding Inverse Demand) The demand function for a certain good is:...

4. (Aggregating Demand Curves and finding Inverse Demand) The demand function for a certain good is: Qu(p) - 100 -p in the US, and Q. (p) - 150 - 2p in Japan. The price p is in a common currency. a. In a single diagram, graph the individual country demand functions in the US and Japan. b. In the same diagram, draw the aggregate demand function (for US + Japan): Qup). c. In your diagram, there will be three relevant...

A monopoly sells in two countries . The demand curves in the two countries are p1...

A monopoly sells in two countries . The demand curves in the two countries are p1 = 12−q1, and p2 = 48−q2. The monopoly’s MC is $4. Now, suppose a long-running trade war between the two countries comes to an end, allowing resales between the two countries. The monopoly is now forced to charge the same price in both countries. The monopoly would have two options: (1) Sell at a price low enough (lower than 12), so that consumers from...
Your firm is a monopoly supplier of a good. The inverse demand for your good (in...

Your firm is a monopoly supplier of a good. The inverse demand for your good (in dollars) is given by P=250−0.02Q . Your firm's cost function (in dollars) is C(Q)=400000+22Q+0.01Q2. Some of that cost comes from a critical part that you import from England that currently costs you $12.00 US for every unit of output that you produce. The current exchange rate is 1.20 $/£. How much profit (in $US) does your firm make? Round your answer to the nearest...
A firm's market demand for its product in the company’s country, a, is given by Qa(Pa)...

A firm's market demand for its product in the company’s country, a, is given by Qa(Pa) = 1,050 − 4Pa, where Qa is the quantity of products produced per year and Pa is the price product. Cost of producing this product is ?(Q) = 70,125 + 0.0125Q2. This implies a marginal cost of production of ?C(q) = 0.025Q. a) Find the profit-maximizing price and quantity. Compute the firm’s profit in this case. Should the firm shut down in the short...

Suppose that a monopoly faces inverse market demand function as P = 70−2Q, and its marginal...

Suppose that a monopoly faces inverse market demand function as P = 70−2Q, and its marginal cost function is MC = 40 – Q. Please answer the following two questions: a. What should be the monopoly’s profit-maximizing output? b. What is the monopoly’s price?

A monopoly sells its good in the U.S. and Japanese markets. The American inverse demand function...

Homework Answers

Add Answer to:
A monopoly sells its good in the U.S. and Japanese markets. The American inverse demand function...

Post as a guest

Earn Coins