A pharmaceutical firm sells its patent-protected flu vaccine in the U.S. and Canada. The demand function...
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A pharmaceutical firm sells its patent-protected flu vaccine in the U.S. and Canada. The demand function in U.S. is Qu = 140-2pu, and that in Canada is Qc = 80 - Pc, where all prices are measured in U.S. dollars and quantity is measured in the same unit. The firm's marginal cost is MC = 10 in both countries. (a) (8 points) Initially, the U.S. and Canada governments prevent resale of the vaccine. What are the firm's optimal pu and pc? (The same price has to be charged to all consumers in the U.S. market and all consumers in Canada market.) How many units does it sell in the U.S. and Canada markets? (b) (8 points) Now assume that the U.S. and Canada governments permit resales and per unit transportation and other transaction costs are negligible, so that the pharmaceutical monopoly can no longer price discriminate. What price will the firm charge and how many vials will it sell in the U.S. and in the Canada markets? A pharmaceutical firm sells its patent-protected flu vaccine in the U.S. and Canada. The demand function in U.S. is Qu = 140-2pu, and that in Canada is Qc = 80 - Pc, where all prices are measured in U.S. dollars and quantity is measured in the same unit. The firm's marginal cost is MC = 10 in both countries. (a) (8 points) Initially, the U.S. and Canada governments prevent resale of the vaccine. What are the firm's optimal pu and pc? (The same price has to be charged to all consumers in the U.S. market and all consumers in Canada market.) How many units does it sell in the U.S. and Canada markets? (b) (8 points) Now assume that the U.S. and Canada governments permit resales and per unit transportation and other transaction costs are negligible, so that the pharmaceutical monopoly can no longer price discriminate. What price will the firm charge and how many vials will it sell in the U.S. and in the Canada markets?
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Related Book For
Essential Statistics
ISBN: 9780134134406
2nd Edition
Authors: Robert Gould, Colleen N. Ryan, Rebecca Wong
Posted Date:
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