Answer Happy

3. (40%) The popular movie series Fantastic Beast and Where to Find Them is coming out. Warner Brothers investigate the movie market and finds out the market demand for this movie in country A is denoted as follows: Pa=12.5-0.005Qa and the market demand curve in country B is: Pb=20-0.01Qb. Suppose Warner Brothers is the only movie manufacturing company operating in country A and B. Its marginal cost is constant where MC=$2, and there is no fixed cost. Marginal revenue in country A is MRa=12.5-0.01Qa, and marginal revenue in country B is MRb=20-0.02Qb. a. Calculate market output, price, consumer surplus, and producer surplus in both countries, if Warner Brothers can set different prices in two countries. b. Find out the deadweight loss in two countries that is generated by the market power holding by the monopolist. Calculate market output, price, consumer surplus, and producer surplus in both countries if Warner Brothers can only set an identical price in two countries. In this case, the markets of country A and B are integrated. The inverse demand curve of this integrated market is: c. 1 P=20-0.01Q if Q = 750, P = 15 Q if Q>750 So we have the following functions for the marginal revenue: 300 MR=20-0.02Q if Q = 750, MR=15-(1/150)Q if Q>750 d. Which country's consumers are better off with price discrimination? Explain. e. Compare the total surpluses in (a) and (c). Which one is more economically efficient?