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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. 


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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?


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AutoSave . OFF ECO 524_Week IV Scenarios - Saved to my Mac Q Home Insert Draw Design Layout References Mailings Review View Acrobat Table Design Layout Share Comments Times New... 10 AA Aa v E 21 AaBbCcDdEe AaBbCcDdEe AaBbCcD AaBbCcDdEE U Paste BI Uva x x A LA- Normal No Spacing Heading 1 Heading 2 Styles Dictate Sensitivity Create and Share Request Pane Adobe PDF Signatures drug . margmal voor is constant at $5 per dose. The demand schedules for both regions are given below. US Foreign Price Quantity 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 3,500 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 Page 1 of 3 716 words x English (United States Focus E 223%

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