Question
Companies face numerous price considerations when setting prices in foreign markets. Regardless of how companies go about pricing their products, foreign prices are often higher
Companies face numerous price considerations when setting prices in foreign markets. Regardless of how companies go about pricing their products, foreign prices are often higher than domestic prices for comparable products. This is often driven by tariffs and other levies on imported products. For example, an Apple iPhone 12 was recently priced at $1,081 in the United States, $1,262 in China (where the product is primarily manufactured and assembled), $1,390 in the United Kingdom, and $1,736 in India. The high price in India is largely because of high import tariffs and other taxes. Assume the Apple iPhone 12 costs $750 to manufacture.
- How much gross profit will Apple make if it sells 1,325,000 iPhones in the United Kingdom?
- How much gross profit will Apple make if it sells 7,950,000 new iPhone 12s in India?
- How much total revenue will Apple make if it sells 1,226,000 iPhones in the United Kingdom?
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