Suppose a Multi-Product Monopolist Sells Two Complementary Goods,A and B

question 30

Multiple Choice

Suppose a multi-product monopolist sells two complementary goods,A and B. Annual market demand for good A is Q^d_A = 600 - 25P_A - 12P_B. Each time a consumer buys A, his demand for B is Q^d_B = 4 - 0.4P_B. The marginal cost of good A is a constant $4, and the marginal cost of good B is a constant $0.50. Suppose the price of good B is $5. If the monopolist ignores the effect of additional sales of A on the sales of good B, how many units of good A will it produce?

• A) 665
• B) 440
• C) 332.5
• D) 220

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