A pharmaceutical company from the United States sells a drug in the United States and in Europe. the domestic demand function is Qusa= 120-2Pusa, and the demand function of Europe is Que = 60-Peu.

The marginal cost for both countries is MC = 10

A) Initially the governments of the United States and Europe prevent the resale of the drug. What are the optimus prices in each country? How many units are sold in the United States and Europe?

B) Now suppose that the goverments of the US and europe permit the resale, and that the costs of transportation per unit and other costs of transaction are null, in such a way that the pharmaceutical monopoly can not place a higher price to discriminate. What is the price charged by the company and how many units do you sell in the United States and Europe?

Answer rating: 100% (QA)

A When there is prevention of resale thus the company can charge d... View the full answer