Question

8. International price discrimination Le Jouet is a French firm, and it is the only seller of toy trains in France and Russia. Suppose that when the price of toy trains increases, Russian children more readily replace them with toy airplanes than French children. Thus, the demand for toy trains in Russia is more elastic than in France. The following graphs show the demand curves for toy trains in France (Dp) and Russia (DR) and marginal revenue curves in France (MRF) and Russia (MRR). Le Jouet's marginal cost of production (MC), depicted as the grey horizontal line in both graphs, is $8, and the resale of toy trains from Russia to France is prohibited. Assume there are no fixed costs in production, so marginal cost equals average total cost (ATC).

Answer 1

solution point when a single value is At the charged: price o s AP Go o o o to France MC=ATC IMRE OF 246 8 10 12 14 16 18 20 Quantity (Millions of Toys) Russia price genel 399 400 30 MC ATC MRR 0246 8 10 12 14 16 18 20 Quantity ALLA S

At that point when an alternative value Charged: The finns sets MC=MR. France price go 200g MC=ATC MRE OF 10 12 14 16 18 20 0 2 4 6 8 Quantiting price Russia. 3 anos como o MCCATO I MRR DR 6 8 10 12 14 16 18 20 0 2 4 Quantity

Singe juice Quantity price Discounerali Quantity Profit rice profit price country France 18 1 1101 24. & 128 Russia 18 160 | 16 8 64 Total مام NIA 170 170 | | NIA (192 Let with Jouet charges a higher price in the market a reatively blanks clastic demand curve. True si false. Answer is Towe. means Le not dumping toy trains into the market, Jouet is Russian