A monopoly sells its good in the United States, where the elasticity of demand is negative 1.6 , and in Japan, where the elasticity of demand is negative 5.6 . Its marginal cost is $7 . At what price does the monopoly sell its good in each country if resales are impossible?

a. The monopoly will sell its good in the United States at $18.67.

b. The monopoly will sell its good in Japan at $8.52.

Explanation:

For any firm, profit is maximized where marginal revenue (MR) is equal to marginal cost (MC), i.e. where;

MR = MC (1)

For a monopolist, relationship between MR, the price elasticity of demand, and the price that gives maximum profits is given as follows:

MR = P(1 + 1/E) (2)

Where P denotes price and E denotes elasticity of demand.

Since from equation (1) we have MR = MC, it also implies that from equation (2):

MC = P(1 + 1/E) (3)

Equation (3) will now be used to solve this question when it can price discriminate and also impossible to resell as follows:

a. Calculation of monopoly price in the United States

Given;

MC = $7

E = -1.6

Substituting the values into equation (3) and solve for P, we have:

$7 = P(1 + 1/(-1.6))

P = $7 / (1 - 0.625)

P = $7 / 0.375

P = $18.67

Therefore, the monopoly will sell its good in the United States at $18.67.

b. Calculation of monopoly price in the Japan

Given;

MC = $7

E = -5.6

Substituting the values into equation (3) and solve for P, we have:

$7 = P(1 + 1/(-5.6))

P = $7 / (1 - 0.178571428571429)

P = $7 / 0.821428571428571

P = $8.52

Therefore, the monopoly will sell its good in Japan at $8.52.

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ans.

heterothermic organisms include those organisms that can switch between homeothermic (having body temperature higher than environment) and poikilothermic (having variation in internal body temperature) strategies.

some migratory birds show heterothermy as they decrease their metabolic rate during cold nights to keep their body temperature low. drop in metabolic rate allows increase in production efficiency of birds that reduces the internal body temperature to make it equal to external cold temperature during cold nights.

thus, the correct answer is 'birds allow their temperature drop in order to increase their production efficiency.'