Wallace Pharmaceuticals is preparing to release its latest hangover relief medicine.

The company has spent $12 million on developing the formula and getting the FDA approval.

They have done estimates of the demand for this product in the United States and Canada.

For the United States, their marketing research department estimated their demand equation to be

Q_US= 30 - 2 P, where Q is in million doses sold in a month, and P is in dollars.

The research they did for Canada was less thorough but they were able to confidently state that the elasticity of demand for this product in Canada is E_CAN= - 2.3 within a fairly broad price range.

The marginal cost of making each dose of the medicine is $8. There is no cost difference between the product sold in U.S. and in Canada.

a. (7 pts) What is the optimal price (in U.S. dollars) Wallace Pharmaceuticals should charge in each market?

Show your work.

b. (2.5 pts) Will your answer change if you are reminded that the Canadian market is smaller than the U.S. market? Explain.

c. (2.5 pts) What issues does the company need to worry about when it charges different prices in different markets?