A firm believes the elasticity of demand it faces in its own country is -1.1 and in the other country is -1.5. Suppose the firm can charge $1 for its products in its own country and can prevent resales between these two countries. What price will it charge in the other country?

A firm believes the elasticity of demand it faces in its own country is -1.1 and in the other country is -1.5. Suppose the firm can charge $1 for its products in its own country and can prevent resales between these two countries. What price will it charge in the other country?

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter6: Simple Pricing

Section: Chapter Questions

Problem 1MC

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Question

A firm believes the elasticity of demand it faces in its own country is

-1.1 and in the other country is -1.5. Suppose the firm can charge $1 for its products in its own country and can prevent resales between these two countries. What price will it charge in the other country?

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