Suppose your manufacturing firm is not a price-taking seller (i.e., has some control over your product price) and sells machinery to U.S. (domestic) buyers as well as foreign buyers

The domestic demand for your product is inelastic but the foreign demand is elastic, and the machinery is bulky so that the high transport costs prevent resale among the buyers. You could charge both groups of buyers the same price for the machinery, but you know that you could increase total sales revenue by charging the domestic buyers a ________ price and charging the foreign customers a ________ price. A) higher, higher
B) higher, lower
C) lower, higher
D) lower, lower


B

Economics

You might also like to view...

Supply-side economists argue for substantial regulation in the economy, particularly in banking, energy, and transportation

Indicate whether the statement is true or false

Economics

Total fixed cost is also known as ______

Fill in the blank(s) with the appropriate word(s).

Economics

Price elasticity of demand shows how:

a) To compute the slope of the demand curve. b) Price responds to demand changes. c) Quantity demanded responds to price changes. d) Quantity demanded responds to changes in the price of other goods.

Economics

Suppose the Japanese government pegs the yen to the U.S. dollar. What could the Japanese central bank do to prevent depreciation of the yen against the dollar in the foreign exchange market?

A. It would lower interest rates to discourage exports to the United States. B. It would buy yen and sell dollars in the foreign exchange market. C. It would increase its official reserve holdings by buying dollars in the foreign exchange market. D. It would print new yen currency notes and exchange them for Japanese government bonds in an open market operation.

Economics