A monopolist has marginal costs MC = Q and home market demand P = 40 –Q...

A monopolist has marginal costs MC = Q and home market demand P = 40 –Q (that is the MR = 40 –2Q). The monopolist can also sell to a foreign market at a constant price P = 16. Find and graph the quantity produced, quantity sold in the home market, quantity sold in the foreign market, and price charged in the home market.Explain why the monopolist’s profits wouldfall if it were to produce the same quantity but sell more in the home market.

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Expert Solution

In the event that the monopolist were to produce a similar quantity as before that is 29.33, yet sell a greater quantity of it in home market where demand is more inelastic, he can't change the price much in any event, when the quantity changes. This was his cost which will keep on being to some degree unaltered yet quantity sold would rise. This way his profits won't ascend as much as when he is selling greater quantity in foreign market. Subsequently dumping encourages him expanding his profits.

Rahul Sunny answered 1 year ago

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