A Monopolist Has a Constant Marginal Cost of $2 Per

question 7

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 = 3,200 - 400p₂, then the price in the United States will

• A) be smaller than the price in England by $1.
• B) be larger than the price in England by $3.
• C) equal the price in England.
• D) be larger than the price in England by $1.
• E) be smaller than the price in England by $3.

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Definitions:

Behavior

The actions, reactions, or functioning of an organism, typically in response to its environment or stimuli.

Salivate

The secretion of saliva from the salivary glands in the mouth, often triggered by the sight, smell, or thought of food.

Phone Ringing

The sound made by a telephone to alert the recipient of an incoming call.

Operant Conditioning

A method of learning that occurs through rewards and punishments for behavior, emphasizing the influence of consequences on behavior.