A monopoly sells its good in the U.S. and Japanese markets. The American inverse demand function is Pa = 120-Q₂. and the Japanese inverse demand function is P₁ = 100-20₁₁ where both prices, Pp, and p,, are measured in dollars. The firm's marginal cost of production is m = $20 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 good.) The equilibrium price in Japan is $. (round your answer to the nearest penny)
A monopoly sells its good in the U.S. and Japanese markets. The American inverse demand function is Pa = 120-Q₂. and the Japanese inverse demand function is P₁ = 100-20₁₁ where both prices, Pp, and p,, are measured in dollars. The firm's marginal cost of production is m = $20 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 good.) The equilibrium price in Japan is $. (round your answer to the nearest penny)
Chapter14: Monopoly
Section: Chapter Questions
Problem 14.9P
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Transcribed Image Text:A monopoly sells its good in the U.S. and Japanese markets. The American inverse demand function is
Pa = 120-Q₂.
and the Japanese inverse demand function is
P₁ = 100-2Q₁
where both prices, p, and p,, are measured in dollars. The firm's marginal cost of production is m = $20 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 good.)
The equilibrium price in Japan is $. (round your answer to the nearest penny)
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