A Monopolist Has Total Production Costs Given by 0

question 13

Essay

A monopolist has total production costs given by 0.5 Q². The demand function in the "home" market is P = 20 -
0.5 Q
a)If the monopolist sells all its output to the home market, what is the equilibrium price and quantity?
b)Now suppose the monopolist has a choice between the home market and a foreign market in which the monopolist can sell any amount Q at a price of $12. Will the monopolist sell in the foreign market? If yes, what would happen to the price the monopolist charges in the home market?