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Question: Cureall is a pharmatheutical monopolist selling a combination of innovative drugs to can patients. Suppose its marginal cost of producing this combination is $200. Suppose its inve demand curve in the U.S. is pa 1500-2q and the inverse demand curve in Canada is pc 1000 -qc Assume that Canadian customers cannot buy Cureall's drugs from the American market (i. resale is impossible).

(a) What are the company's profit-maximizing quantity and price in the U.S? What are the profi maximizing quantity and price in Canada?

(b) With profit-maximizing quantity and price you identify in (a), what is the elasticity of demand for these country? which has more elastic demand? Is price higher or lower in the country with more elastic demand?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M92586441

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