In Figure, the equation for each country€™s demand curve is QD = 160 €“ 40 P, where QD represents millions of doses. Use this demand equation to answer the following questions:
a. Suppose the price negotiated for Europe is $1 per dose (rather than $0.75 as in the chapter), and there is no parallel trade. How many doses would Europe buy, and what would be its contribution to R&D expenditures and profit? What would be the total contribution from the U.S. and Europe?
b. Suppose that parallel trade occurs, and the price in both countries ends up converging to $1.00 per dose. How much would Pfycor collect in total to cover its R&D expenses and profit? How does this amount compare to what it collected without parallel trade, in part (a)?
c. Suppose as in part (b) that parallel trade occurs. But this time, because they know parallel trade will occur, the pharmaceutical companies bargain harder, and end up with a negotiated price of $1.50 per dose in Europe. Once again, the price converges to the negotiated price in both countries. How much would Pfycor collect in total to cover its R&D expenses and profit? How does this amount compare to the total collected in part (a), without parallel trade and the lower negotiated price? How does this amount compare to the total collected in the chapter, when Pfycor charged the monopoly price in bothcountries?

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Current Job Discrimination Lower Wage Lower Human Capital Investment Pre-market Discrimination Unemployment Lower Skill Level Less Job Experience