Chanel perfume is sold in France and in the United States. Assume initially that one euro is worth $ 1.30 and that a 100 ml bottle of perfume sells for $ 80 in the United States. If Chanel does not price discriminate internationally, what is the price that would be paid for this perfume in France? Now suppose that Chanel decides to price discriminate and finds that it would maximize its profit by lowering its price in the United States to $ 70 and raising its price by 25% in France. Explain why. Next, explain what happens if the value of the euro rises by 25% in terms of the dollar.
Answer to relevant QuestionsDoes an increase in average income cause a shift of the demand curve for avocados or a movement along the demand curve? Explain briefly.Explain why a change in the price of fertilizer causes a shift in the supply curve for avocados rather than a movement along the supply curve for avocados. The United States is increasingly outsourcing jobs to India: having the work done in India rather than in the United States. For example, the Indian firm Tata Consultancy Services, which provides information technology ...Increases in the price of petroleum affect the demand curve for aluminum. Petroleum- based chemicals (petrochemicals) are the main raw material used for plastic. Plastics are used to make many products, including beverage ...Quebec, Canada, offers a per-child subsidy on day care for young children that lowers the price to $ 7 per child as of 2011 (at a cost of about $ 10,000 per child per year).a. What is the effect of this subsidy on the ...
Post your question