A Monopolist Has a Constant Marginal Cost of $2 Per

question 9

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:

High Barriers

Substantial obstacles or challenges that prevent or hinder entry into a market or industry.

Buyer Power

Refers to the ability of consumers to influence the pricing and quality of goods and services in a market due to their collective purchasing power.

Supplier Power

Refers to the ability of providers of goods or services to dictate terms and influence prices in the marketplace due to their strong position vis-à-vis buyers.

Competitive Edge

The unique advantage a company or product has over its competitors, making it more attractive to consumers or clients.