Question

In: Economics

A prescription drug is produced in the United States and sold internationally. Each unit of the...

A prescription drug is produced in the United States and sold internationally.
Each unit of the drug costs $60 to produce. In the German market, you sell the drug for
150 euros per unit. The current exchange rate is 0.667 U.S. dollars per euro. Current
demand for the drug is 100 units, and the estimated elasticity is 2.5. Assuming a linear
demand curve, determine the appropriate sales price (in euros) for the drug. SOLVE USING EXCEL SOLVER. NOTE: aLL PARTS OF THE QUESTION ARE ALREADY INCLUDE HERE. NO EXTRA DATA SHEET.

Solutions

Expert Solution

The optimal solution is shown below, according to which price should be raised to $205 or 205/0.667 = 307.5 euros which will maximize profit.

Rahul Sunny answered 2 years ago
Next > < Previous

Related Solutions

If 12,500 units are produced and sold, what is the variable cost per unit produced and sold?
Martinez Company’s relevant range of production is 7,500 units to 12,500 units. When it produces and sells 10,000 units, its average costs per unit are as follows:  Average Cost Per UnitDirect materials$ 5.60Direct labor$ 3.10Variable manufacturing overhead$ 1.40Fixed manufacturing overhead$ 4.00Fixed selling expense$ 2.60Fixed administrative expense$ 2.20Sales commissions$ 1.20Variable administrative expense$ 0.454. If 12,500 units are produced and sold, what is the variable cost per unit produced and sold? (Round your answer to 2 decimal places.)
1. If 18,000 units are produced and sold, what is the variable cost per unit produced and sold?
Refer to the data given in Exercise 1-7. Answer all questions independently.  Kubin Company's relevant range of production is 18,000 to 22,000 units. When it produces and sells 20,000 units, its average costs per unit are as follows:   Required: 1. If 18,000 units are produced and sold, what is the variable cost per unit produced and sold? 2. If 22,000 units are produced and sold, what is the variable cost per unit produced and sold? 3. If 18,000 units are...
Between 2000 - 2010: What are the main goods and services the United States traded internationally?...
Between 2000 - 2010: What are the main goods and services the United States traded internationally? What trade barriers were in place during that decade? What are two pros and two cons of the trade barriers used?
In 2017, the entire fleet of light‑duty vehicles sold in the United States by each manufacturer...
In 2017, the entire fleet of light‑duty vehicles sold in the United States by each manufacturer must emit an average of no more than 84 milligrams per mile (mg/mi) of nitrogen oxides (NOX) and nonmethane organic gas (NMOG) over the useful life ( 150,000 miles of driving) of the vehicle. NOX + NMOG emissions over the useful life for one car model vary Normally with mean 78 mg/mi and standard deviation 6 mg/mi. (a) What is the probability that a...
In 2017, the entire fleet of light‑duty vehicles sold in the United States by each manufacturer...
In 2017, the entire fleet of light‑duty vehicles sold in the United States by each manufacturer must emit an average of no more than 86 milligrams per mile (mg/mi) of nitrogen oxides (NOX) and nonmethane organic gas (NMOG) over the useful life (150,000 miles of driving) of the vehicle. NOX + NMOG emissions over the useful life for one car model vary Normally with mean 82 mg/mi and standard deviation 5 mg/mi. (a) What is the probability that a single...
Suppose that in the United States 4 worker-hours are required to produce each unit of clothing...
Suppose that in the United States 4 worker-hours are required to produce each unit of clothing and each unit of food. In Canada, 1 worker-hour is required for each unit of clothing and 2 worker hours are required for a unit of food. Show your work. A. Which country has an absolute advantage in each good? B. Which country has a comparative advantage in each good? C. If the labor force of the United states increases by a factor of...
Suppose that in the United States 4 worker-hours are required to produce each unit of clothing...
Suppose that in the United States 4 worker-hours are required to produce each unit of clothing and each unit of food. In Canada, 1 worker-hour is required for each unit of clothing and 2 worker hours are required for a unit of food. Show your work. A. Which country has an absolute advantage in each good? B. Which country has a comparative advantage in each good?
1. If diminishing returns exist, then Each unit produced will cost incrementally more. Each unit produced...
1. If diminishing returns exist, then Each unit produced will cost incrementally more. Each unit produced will cost incrementally less. The total cost curve will be negatively sloped. The total cost curve will be flat. 2. For the perfectly competitive firm, the marginal revenue is always Decreasing. Constant. Increasing. Equal to average total cost. 3. Greater-than-normal profit represents Below-average returns to capital. Exploitation of workers. Payment for entrepreneurship. Explicit costs. 4. A perfectly competitive firm will maximize profits by choosing...
Background: Accounting scandals and fraud, both in the United States and internationally, have re-ignited the debate...
Background: Accounting scandals and fraud, both in the United States and internationally, have re-ignited the debate over the current laws, regulation and accounting principles. The relative merits of GAAP, which takes a “rules-based” approach to accounting, versus IFRS, which takes a “principles-based” approach have been under scrutiny. In the last couple of years, the FASB announced that it intends to introduce more principles-based standards to improve general accounting principles and practices. Organizations have internal control measures to detect fraud. In...
Background: Accounting scandals and fraud, both in the United States and internationally, have re-ignited the debate...
Background: Accounting scandals and fraud, both in the United States and internationally, have re-ignited the debate over the current laws, regulation and accounting principles. The relative merits of GAAP, which takes a “rules-based” approach to accounting, versus IFRS, which takes a “principles-based” approach have been under scrutiny. In the last couple of years, the FASB announced that it intends to introduce more principles-based standards to improve general accounting principles and practices. Organizations have internal control measures to detect fraud. In...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT