A specialized rice grower sells rice in two markets, the United States and Japan, and the marginal cost is the same in both markets. The price elasticity of demand in the United States is -2.0, and the price elasticity of demand in Japan is -1.5

If the grower practices group price discrimination, which country's consumers will pay a higher price and by how much?


PUS(1 + 1/-2 ) = PJ(1 + 1/-1.5 ). Rearranging yields PUS = (2/3 )PJ. The price in the United States will be 2/3 the price in Japan.

Economics

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The corn basis in Nevada is about -$0.30/bu. The corn basis in Gilbert is about -$0.20/bu. Where should a corn farmer living in Ames, halfway between Nevada and Gilbert, ship his corn to make the most money?

A. Nevada. B. Gilbert. C. They both give the same return to the farmer if transportation to each destination costs the same. D. None of the above.

Economics

Which of the following is assumed constant in the quantity theory of money?

A. output B. velocity C. money supply D. the price level

Economics

Assume that the required reserve ratio is 25 percent. If the Federal Reserve sells $120 million in government securities to the general public, the money supply will immediately:

A. Decrease by $120 million with this transaction, and the decrease in money supply could eventually reach a maximum of $480 million B. Decrease by $120 million with this transaction, and the decrease in money supply could eventually reach a maximum of $360 million C. Increase by $120 million with this transaction, and the increase in money supply could eventually reach a maximum of $480 million D. Increase by $120 million with this transaction, and the increase in money supply could eventually reach a maximum of $360 million

Economics