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Question: The price elasticity of demand for a textbook sold in the United States is estimated to be -2.0, whereas the price elasticity of demand for books sold overseas is - 3.0. The U.S. market requires hardcover books with a marginal cost of $7; the overseas market is normally served with soft cover texts, having a marginal cost of only $5. Calculate the profit-maximizing price in each market. (Hint: Remember that MR = P (1 + 1/e))

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M92598237

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