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

question 13

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 considers the effect of additional sales of A on the sales of good B, how many units of good A will it produce?

• A) 415
• B) 332.5
• C) 220
• D) 207.5

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Definitions:

Laissez-faire Cultural Pluralism

A viewpoint advocating for minimal governmental intervention in the cultural practices and identities of different groups within a society.

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The variety of human societies or cultures in a specific region, or in the world as a whole.

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Guidelines, rules, or procedures set by governments to direct and manage public affairs and achieve specific outcomes.

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Geographic areas with high concentrations of one particular ethnicity, often embodying distinct cultural norms, economic systems, and social practices.