Profit-maximizing prices and quantities in each market

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Reference no: EM131380650

A pharmaceutical firm faces the following monthly demands in the U.S. and Mexican markets for one of its patented drugs:

QUS = 300,000-5,000PUS

QX = 240,000-8,000PX

where quantities represent the number of prescriptions. Assume that resale or arbitrage among markets is impossible and marginal cost is constant at $2 per prescription in both markets. Monthly fixed costs are $1 million in the U.S. and $500,000 in Mexico.

Find the profit-maximizing prices and quantities in each market. What are the firm's total profits?

Reference no: EM131380650

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