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Find the marginal revenue for quantities that you can

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Reference no: EM13392654

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

  1. 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?
  2. 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: EM13392654

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