Suppose a manufacturer creates a product with MC=10. The manufacturer sells the product both domestically and abroad. There is no difference in marginal cost and all conditions necessary to practice price discrimination have been met. The manufacturer is interest in maximizing profits by charging a higher price to consumers abroad. Demand abroad (A) is characterized by the inverse demand curve P = 72 - 2Q. Demand domestically (D) is characterized by the inverse demand curve P = 40 - 3Q. What is the difference in prices between consumers abroad versus those at home ( PA- PD )?

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To find the price difference between consumers abroad and those at home PA PD we need to determine t... View the full answer