A Monopolist Has a Constant Marginal Cost of $2 Per

question 12

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 = 6,000 - 600p₁ and demand in England is given by Q₂ = 2,400 - 400p₂, then the price in the United States will

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

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Definitions:

Marginal Rate

The rate at which one variable changes with respect to a minute increase in another variable, often used in the context of marginal tax rates or marginal rates of substitution in economics.

Market Basket A

A selected set of goods and services used to monitor changes in price levels over time, often for the purpose of calculating inflation.

Utility Maximizing

The act of choosing the combination of goods and services that maximizes a consumer's satisfaction or happiness with a given income.

Marginal Utility

The additional satisfaction or utility received by consuming one more unit of a good or service.