Reference Ref 1023 Figure 1013 A pharmaceutical company sell

Reference: Ref 10-23

(Figure 10.13) A pharmaceutical company sells its pills in a foreign and domestic market.

a.

Suppose the pharmaceutical company uses segmenting. What price should it charge in each market? How many pills are sold in each market?

b.

If the pharmaceutical company must charge the same price in all markets, what price will it set? How many pills will it sell?

Solution

A pharmaceutical company sells its pills in a foreign and domestic market.

The pharmaceutical company while using segmenting should charge $7 per pill and the quantity sold at 5 units in the foreign market. It should charge $12 per pill and 4 units of output in the domestic market.

If the pharmaceutical company must charge the same price in all markets, it should fix a price of $8 per pill and the quantity sold will be 6 units.

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