Suppose that the demand for certain drugs

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Suppose that the demand for certain drugs is QN=100-P in North America and QS=100a-P in Sub-Saharan Africa where a<1. Show that with marginal cost equal to 20 for such drugs, it must be the case that a>0.531 if the drug manufacturer is to serve both markets while charging the same price in each market. (Hint: Calculate the total profit if the manufacturer serves only North America and then calculate the total profit if it serves both markets.

Reference no: EM131000509

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