A Monopolist Has a Constant Marginal Cost of $2 Per

question 30

Multiple Choice

A monopolist has a constant marginal cost of $2 per unit and no fixed costs. He faces separate markets in the United States and England. He can set one price p₁ for the U.S. market and another price p₂ for the English market. If demand in the United States is given by Q₁ = 7,000 - 700p₁ and demand in England is given by Q₂ = 1,200 - 200p₂, then the price in the United States will

• A) equal the price in England.
• B) be smaller than the price in England by $2.
• C) be larger than the price in England by $4.
• D) be larger than the price in England by $2.
• E) be smaller than the price in England by $4.

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Definitions:

Supply Planning Process

The proactive method of coordinating assets to optimize the supply of products and services.

Sales Forecast

The process of estimating future sales, based on historical data, industry comparisons, and market analysis, to guide business planning.

Production Forecast

A projection of the quantity of goods or services a company plans to produce over a specific period, based on demand predictions and resource availability.

General Economic Forecast

An estimation or prediction of future economic conditions globally or within a specific region.