Information for questions 1-8 The following figure has sever…
Information for questions 1-8 The following figure has several curves. They are: The domestic demand for a good in a certain country: black curve, labeled DDOM. The marginal cost of a monopolist that dominates the market in this country: yellow curve, labeled MC=S. Four auxiliary curves, labeled A, B, C, and D. Please spend a couple of minutes familiarizing yourself with these curves, since there are quite a few on the figure. Note that one vertical grid space is $5; while one horizontal grid space is 25 units of the good. This monopolist can only sell in the domestic country. When the country is in autarky, it just behaves as any regular monopolist. When the country engages in free trade with the rest of the world, the monopolist must take into account the threat of imports at the world price PW=5 (horizontal line at a height of $5, not shown). Assume that this is a small country, so nothing that it does will affect this world price. If a line seems to cross a grid point, you must assume it does so, and therefore get an exact answer. In these cases, only the exact answer is accepted. Examples: you must assume that line D at a price of $20 corresponds exactly to a quantity of 75; and you must assume that lines C and D cross exactly at a price of $20, and quantity of 75. When you need to read off a value not crossing at a grid point, then reasonable approximations within one grid square are accepted. Example: line D at a price of 35 seems to be roughly a quantity of 37.5, so 37.5 ± 25 will be accepted. Also, assume that the horizontal intercept of line B is exactly 87.5. For all numerical questions enter a whole or decimal number. If an answer cannot be obtained with the information given, enter the number 0. Do not enter any dollar signs, just numbers, and a decimal point if needed. For questions 1-2, assume that the country is in autarky, that is, it doesn’t trade with any country. What quantity does the monopolist sell?
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