A pharmaceutical company faces the following demand function for one of its products in the American market:

Q_A=2,000,000 - 20,000P_A

where Q_A is the number of prescriptions sold in the American market annually and P_A is the price per prescription. The firm's annual total cost function is:

TC_A=$40,000,000+$5Q_A

The company is considering also entering the Brazilian market where the demand for the pharmaceutical is:

Q_B=200,000-3,000P_B

The cost function for the Brazilian market is:

TC_B=$1,000,000+$5Q_B

a) Calculate the firm's optimal price in the US. Show the work.

b) What is the optimal price to charge in the Brazilian market? Show the work.

c) Explain why the problem of parallel imports, a form of arbitrage, may result from the pricing structure you have calculated in the previous questions

d) To address the problem of parallel imports, the company is considering two options: 1) implement uniform pricing, or 2) paying $1,500,000 annually to implement a program to monitor US clinics to ensure its products imported from Brazil are not sold in the US. What should it do? Explain.