Re: MICRO Doubt

Posted by Homer Simpson on Apr 30, 2014; 6:21pm
URL: http://discussion-forum.276.s1.nabble.com/MICRO-Doubt-tp7588117p7588128.html

if we apply the usual MR=MC rule for domestic markets, we see that 5-3q = q and p>3 so the monopolist can sell cheaper overseas anyway. this is a case for dumping.

So, i equate foreign price with MC to get maximum quantity produced. I have total q now. However, we know that monopolist will charge some other price in the domestic market.

Thus to find domestic production, equate MR = Foreign price and find domestic q. calculate domestic p through the demand function.

The difference between total production and domestic production would be your exports.