Pearson Learning is the monopolistic publisher of Silberberg\'s principle of Eco

Question

Pearson Learning is the monopolistic publisher of Silberberg's principle of Economics. The domestic demand function for the book is P^us(Q)=70-2Q, the international demand function for the book is P^IN(Q)=50-Q. The marginal cost function is MC(Q)=17+Q. The function for domestic marginal revenue MR^us(Q)and the function for international marginal revenue MR^iN(Q) The number copies for domestic selling, Q^us, and that for international selling. Q^IN, so that the rent is maximized. Show your work. (The optimal condition is MR^US(Q^us)= MR^IN(Q^IN)=MC(Q^us+ Q^IN)) The resultant domestic price P^us and international price P^IN

Explanation / Answer

Mc = 17 + Q

Pin = 50 - Q

TR = PxQ

TRin = 50Q - Q2

a) MRin = 50 - 2Q

PUS = 70 - 2Q

TRUS = 70Q - 2Q2

MRUS = 70 - 4Q

b) Profit maximising condition, MR = MC

For India, 50 - 2Q = 17 + Q

3Q = 50 -17; Q = 33/3

Q = 11

For US, 70 - 4Q = 17 + Q

5Q = 70-17

Q = 10.6

Pin = 50 - 11 => 39

PUS = 70 - 2x10.6 => 48.8

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