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A monopolist sells in two geographically divided markets, the east and the west. Marginal cost is constant at $50 in both markets. Demand and marginal revenue in each market are as follows:
QE = 900 - 2*PE
MRE = 450 - QE
QW = 700 - PW
MRW= 700 - 2*QW
Find the profit-maximizing price and quantity in each market.
What is the economic profit in each market?
In which market is demand more elastic?
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