What is the marginal revenue for the quantities

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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.

Price

US Quantity

Foreign 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

3,5000

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

Scenario 1 Questions

  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: EM133132537

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