Separated by large mountain

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There are two cities, S and N, separated by a large mountain. A firm with its manufacturing plant at the top of the mountain sells its product in both cities. Consumers in S: Ps = 410 - 10Qs Consumers in N: Pn = 110 - 5Qn. The firm’s marginal cost is: MC = 10.

A. How many units should the firm sell in each city and what price should it charge in each city? (Hint: Find Marginal revenue in each market first.)

B. What would you expect to happen if the government completes a tunnel through the mountain and opens an interstate highway between the two cities?

Reference no: EM131393501

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