A Monopolist Has a Constant Marginal Cost of $2 Per

question 14

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 = 1,200 - 200p₂, then the price in the United States will

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

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Definitions:

Do-it-yourself

A term referring to the practice of building, repairing, or making things oneself, rather than hiring a professional or buying ready-made products.

Static Reasoning

A way of thinking in which individuals assume that the world is unchanging and what is true now will always be true.

Preoperational Thought

A stage in Piaget's theory of cognitive development where children from about 2 to 7 years of age are able to use symbols and language but do not yet understand concrete logic.

Conservation

The careful preservation and protection of something, especially aimed at preventing the depletion of natural resources.