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8. International price discrimination Le Jouet is a French firm, and it is the only seller of toy trains in France and Russia. Suppose
8. International price discrimination Le Jouet is a French firm, and it is the only seller of toy trains in France and Russia. Suppose that when the price of toy trains increases, Russian children more readily replace them with toy airplanes than French children. Thus, the demand for toy trains in Russia is more elastic than in France. The following graphs show the demand curves for toy trains in France (DF) and Russia (DR) and marginal revenue curves in France (MRF) and Russia (MRR). Le Jouet's marginal cost of production (MC), depicted as the grey horizontal line in both graphs, is $8, and the resale of toy trains from Russia to France is prohibited. Assume there are no fixed costs in production, so marginal cost equals average total cost (ATC).
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