8. Dumping goods is profitable whenever: the foreign market than marginal cost b

Question

8. Dumping goods is profitable whenever: the foreign market than marginal cost but lower than the home price. price (including transportation costs) is higher reign firm eventually closes because it cannot compete. the firm can hire illegal workers to process the production. the firm does not get caught. Score: 0 of 1 9 (Scenario: Discriminating Monopolist) The demand curve in itshome market is P = 200-Q: the demand curve in its foreign market is P-160-20; and its marginal cost is a constant $20 per unit. Its marginal revenue in the home market is MR-200- 20 and is MR = 160-4Q in the foreign market. What is the discriminating monopolist's profit per unit in the foreign market? $90 $110 3 $35 $70 Score: 0 of 1 810. (Figure: The Home Monopolist's Market) The graph shows a home monopolist market with free trade and with the imposition of a tariff. What is the decrease in consumer surplus due to the tariff? Price $1100 MC $320 $250 $70 Quantity 75 110 150 185 $58,500 $78,625 $11,725 $20,125 P) MULTIPART LESSONSbsi 4FC84A60 la highered co launch pad feenstrataylorintie ode/5806329#launchpad te

Explanation / Answer

(9) Option (4)

Profit is maximized for foreign market when MR = MC

160 - 4Q = 20

4Q = 140

Q = 35

P = 160 - (2 x 35) = 160 - 70 = $90

Unit profit = (P - MC) = $(90 - 20) = $70

(10) Option (3)

Before tariff, Price = $250 & Quantity demanded = 185

After tariff, Price = $320 & Quantity demanded = 150

Change in Consumer surplus = (1/2) x $(320 - 250) x (150 + 185) = (1/2) x $70 x 335 = $11,725

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