Question
Suppose that your company has discovered a drug that cures the Covid-19. You can produce the drug at a marginal cost of 10. Assume there
Suppose that your company has discovered a drug that cures the Covid-19. You can produce the drug at a marginal cost of 10. Assume there are no fixed costs and there are no other costs. In Europe, the demand for the drug is
QE = 60 - PE, where QE is the quantity demanded when the price in Europe is PE. In the United States, the demand for the drug is QU = 100 - PU, where QU is the quantity demanded when the price in the United States is PU.
a)If you are allowed to engage in third-degree price discrimination, what price would you set on each continent to maximize profit?
b)If you have to use a single price worldwide to maximize profit, what would it be?
c)Is it beneficial to have single price for your company and the consumers?
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