Question

A monopolist named ghost has created a viral sensation: the supersecretbox. ghost estimates that the inverse demand for this product in the united states is P1=25.00-Q/1200, where P1 is the price in the united states measured in u.s. dollars. the inverse demand for the product in england is P2=16.00-Q/250, where P2 is its price in england measured in u.s. dollars. ghost has a cost function c(Q)=5000+2Q, where Q is the total number of supersecretboxes (Q1 Q2) that it produces. further assume that all production is made in one factory. assuming ghost must charge a uniform price and sells in both countries, how many copies should it sell? (round your answer to two decimals if necessary.)

Answer 1

The optimal number of copies Ghost should sell is 3,600.

Step-by-step explanation:

In order to determine the optimal number of copies to sell, we need to find the quantity level where the demand and the supply curves intersect.

For the United States market, the inverse demand function is given by P1=25.00-Q/1200, and for the England market, the inverse demand function is given by P2=16.00-Q/250.

Ghost, the monopolist, must charge a uniform price. So, in order to find the optimal quantity (Q) to produce and sell, we need to find the level at which both the demand and supply curves intersect. This means setting the two demand functions equal to each other: P1 = P2. Simplifying and solving for Q, we get Q = 3,600.