To maximize profits, the firm should sell computers in the U.S. at __________ and _________ computers in Japan priced at __________?
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Answer: D. 500, $1,400, 400 $800
Explanation
Profit maximizing price discrimination requires setting specific prices in distinct markets. Calculations for this problem yield sales of 500 units at $1,400 in the U.S. Simultaneously, the firm sells 400 units at $800 in the Japanese market. Price discrimination occurs when firms charge different prices to different consumer groups. Monopolists maximize profit where marginal revenue in each market equals marginal cost. Segmented markets prevent consumers from reselling goods between different regions.
Multinational corporations frequently adjust pricing across countries based on local demand. Software companies and pharmaceutical firms utilize international price discrimination. Understanding pricing strategies helps antitrust regulators monitor anti competitive practices. Alternative quantity and price combinations fail to satisfy the marginal revenue equality condition. Incorrect pricing calculations yield sub optimal total profits for the discriminating firm. Other options violate profit maximization rules for segmented international markets.
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