Can someone please help me with the following question?
Suppose that Perfect Labs produces autoclaves (laboratory equipment) at a constant marginal cost equal to $20,000 and a fixed cost of $10 billion. Perfect Labs sells its autoclaves in Canada and in Germany. You are trying to determine the best pricing strategy for Perfect Labs and you know that the demands in each country are the following:
QG =4,000,000−100PG and QC =1,000,000−20PC where subscript G denotes Germany and subscript C denotes Canada.
(a) (10 points) What is the quantity of autoclaves that Perfect Labs will sell in each market and at what price(s)? What is the total profit?
(b) (10 points) If Canada and Germany sign a trade agreement which forces Perfect Labs to charge the same price in both markets, how many units will be sold in each market and at what price? What is the firm's total profit in that case?
(c) (10 points) Now suppose that Perfect Labs considers charging a two-part tariff in each coun- try. What is the profit-maximizing fixed fee and per unit price in each country? What is the total profit for Perfect Labs in this case?
(d) (3 points) If Perfect Labs were able to employ perfect price discrimination, what would be its total profit? Explain.
(e) (1 points) If Perfect Labs could choose, which of the three pricing strategies (a)-(c) would it choose? Why?
(f) (6 points) If consumers were allowed to vote for one of those three pricing strategies (a)-(c), which one would they vote for? Explain.
Recently Asked Questions
- Calculate the concentration in ppb by mass of a solution with 2.3×10−5g CaSO4 if the solution has a volume of 2.5 L (with a mass of 2500 g).
- The adjustment that is made to allocate the cost of a building over its expected life is called a. Depreciation b residual value c accumulated depreciation d
- In a power of attorney, should the principal have any reservations about empowering the attorney-in-fact to act under Exhibit A, Subdivision 15, “Gifts to