Nucor is the largest U.S. based steel maker. It sells industrial grade steel to both South Korea and Canada. Their economic division estimates the markets for these countries as given below:

Using this information and applying the concept of Price Discrimination (Ch. 9), answer the following questions, which can be useful for both the production and marketing divisions of Nucor.

a. How much Nucor should sell in the Canadian market vs. the South Korean market and why?

b. What will be the price, revenues, and profits if Nucor does not discriminate between the two markets? Show all work.

c. If Nucor engages in price discrimination, what prices it will change in each of the sub markets. Why?

d. Compare and contrast the revenue, price, and profits between nondiscrimination and discrimination cases.

e. What are the assumptions/factors necessary for Nucor to continue to discriminate?

Transcribed Image Text:

Price (Dolars) 700 500 200 0 South Korea DSK MO MRsk 25 35 Steel (Tons) Price (Dollars) 500 400 -200- 0 Canada De -MG MRC 10 20 30 Steel (Tons) Price (Dollars) 500 300 --200 0 15 Total Market 45 Steel (Tons) 30 MC ATC Dak.c MRSKIC 60 Price (Dolars) 700 500 200 0 South Korea DSK MO MRsk 25 35 Steel (Tons) Price (Dollars) 500 400 -200- 0 Canada De -MG MRC 10 20 30 Steel (Tons) Price (Dollars) 500 300 --200 0 15 Total Market 45 Steel (Tons) 30 MC ATC Dak.c MRSKIC 60

Answer rating: 100% (QA)

a The total demand graph shows that for the firm MR MC 200 The equilibrium quantity is Q 45 and ... View the full answer