Illustrate what are firm total profits

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Reference no: EM1371333

Q. A pharmaceutical firm faces following monthly demands in U.S. and Mexican Markets for one of its patented drugs: Qus= 300,000 - 5000Pus and Qx= 240,000- 8000Px where quantities represent number of prescriptions. Assume that resale or arbitrage among markets is impossible and that marginal cost is constant at $2 per prescription in both markets. Monthly fixed costs are 1million in US and 500,000 in Mexico.

Draw demand, marginal revenue and marginal cost curves for each market. Approximate profit maximizing prices and quantities graphically and/or determining solutions algebraically. Illustrate what are firm's total profits?

Reference no: EM1371333

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