Find the marginal revenue for quantities that you can

Reference no: EM13390269

Suppose the market for a certain pharmaceutical drug consists of domestic (United States) consumers and foreign consumers. The drug's marginal cost is constant at $5 per dose. The demand schedules for both regions are given below.

	US	Foreign
Price	Quantity	Quantity
$60	1,000	200
55	1,500	250
50	2,500	400
45	4,000	600
40	8,000	1,000
35	14,000	2,000
30	20,000	3,500
25	30,000	7,000
20	40,000	16,000
15	55,000	35,000
10	65,000	75,000
5	77,000	150,000

Assuming the markets cannot be separated (and thus the same price must be charged to both regions), what is the marginal revenue for the quantities that you can determine? What price should be charged to maximize profit?

If the markets can be separated, determine the marginal revenues in each market. If the firm must set a single price for the drug in each market (the prices can vary between markets), what price should be charged in the foreign market? In the domestic market? What happens to the company's profit?

Reference no: EM13390269

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