# Suppose that the marginal cost of an additional ton

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5. Suppose that the marginal cost of an additional ton of steel produced by a Japanese firm is the same whether the steel is used domestically or exported abroad. If the price elasticity of demand for steel is greater abroad than it is in Japan, and if steel cannot be resold after the original sale, then in order to maximize profits: a) The Japanese firm will sell more steel abroad than it will sell in Japan. b) The Japanese firm will sell more steel in Japan than it will sell abroad. c) The Japanese firm will sell steel at a lower price abroad than it will charge domestic users. d) The Japanese firm will sell steel at a higher price abroad than it will charge domestic users.

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3 6. Choose the statement that most accurately describes pricing strategies. 7. Rogers sells multiple services involving both fixed (landline) telephone service and internet access. Monthly bills from Rogers usually consist of two parts for both these services: a (fixed) connection fee, and usage fee (i.e., fee per minute of use). Rogers marginal cost for supplying a phone call is \$0.01/minute. service and other consumers have a relatively high willingness to pay for internet service.
4 8. The aggregate daily demand for rides at the PNE (Pacific National Exhibition) is given by P = 1000 Q for children over the age of 12, and P = 500 Q for children of age 12 and under. Here price is measured in cents (i.e. if P = 50, this means 50 cents not \$50). The marginal cost per ride at the PNE is constant at 100 cents per ride and to simplify assume there are no fixed costs. As the manager of the PNE, you want to set prices to maximize PNE profits. Assume consumers within each category are identical.

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