A pharmaceutical firm faces the following monthly demands in the U.S. and Mexican markets for its only patented drug:

Q(U.S.) = 300,000 - 5,000 P(U.S.)

Q(Mex) = 240,000 - 8,000 P(fMex)

where quantities Q represent the number of prescriptions per month and the prices P are denominated in U.S. dollars (i.e., the Mexican demand has already been adjusted for the dollar/peso exchange rate). The marginal cost of the drug is constant at $2 per prescription in both markets. The firms monthly overhead costs for this drug are $1 million in the U.S. and $500,000 in Mexico.

a) Suppose that arbitrage between the markets is impossible, so the firm is able to charge different prices in each market. If the firm practices third degree (i.e., verifiable characteristics) price discrimination, what price will it charge in the U.S.? What price will it charge in Mexico? How much will it produce and sell in the U.S.? How much will it produce and sell in Mexico? What are the firm's total profits from the sale of the drug in this case?

b) Now suppose the firm cannot prevent arbitrage between the countries, so it is forced to charge the same price in the U.S. and Mexico. What price will it charge for the drug? How much will it produce and sell overall? What are the firm's total profits from the sale of the drug in this case?

c) Now suppose Congress is considering a law that would make arbitrage legal between the U.S. and Mexico (i.e., the law would allow for the importation and sale of drugs from Mexico to the U.S.). How much would the pharmaceutical firm spend per month on lobbying efforts to defeat this law, given your answers to parts (a) and (b).

Stock Dividends

On August 1, 2020, Perkins declares a 15% Common Stock dividend. The market (fair) value of the stock on August 1, 2020, is $30 per share. August 15, 2020, is the date of record. The stock dividend will be distributed on August 31, 2020. Instructions: (a) Prepare all required journal entries for August 1, 15, and 31, 2020. If no journal entry is required, state NA. (b) Assume that Perkins declares a 30% Common Stock dividend instead of a 15% stock dividend. Prepare all required journal entries for August 1, 15, and 31, 2020. If no journal entry is required, state NA

Your U.S. Based company, Shoe-La-La is looking to expand internationally. You have three different pitch meetings coming up, one in Ireland, one in Egypt, and one in Brazil. Your consultant brings you a presentation slide deck with visualizations throughout. You are going to use this same slide deck at all three pitch meetings so you can deliver a consistent message and image for your company. Is this a good idea? What would concern you about using the same slide deck for each meeting and how would you overcome these concerns?

Dougherty Corporation purchased a new delivery van for use in its dry cleaning business. As part of the purchase of the van the following costs were incurred: Acquisition cost 30,000, Sales tax 1,800, Title transfer 250, and two year service contract 1,600. What would be the capitalized cost of the van in Dougherty’s financial statements?

When is goodwill recognized and reported as an intangible asset in a company’s balance sheet?

Barton Inc, a U.S. corporation, includes buildings on its 12/31/2018 balance sheet with a “book value” of $54,000,000 (cost of $72,000,000, and accumulated depreciation of $18,000,000). This indicates

Brantley Company sells electronic fish finders with a one-year warranty. At 12/31/17 the estimated warranty liability on Brantley’s balance sheet showed a balance of $11,600. During 2018, Brantley sold $960,000 fish finders and estimates that warranty costs will be 2.5% of sales. Also, during 2017, Brantley    performed warranty repairs of $22,800. What amount of warranty expense would Brantley recognize on their 2017 income statement?

On September 1, Clogged Gutters Inc. borrows $180,000 from Second National Bank on a 6 month, $180,000, 4% note. What adjusting entry must Clogged Gutters make on December 31 before financial statements are prepared?

The New Zealand dollar to U.S. dollar exchange rate is 1.34 ​, and the British pound to U.S. dollar exchange rate is .63. If you find that the British pound to New Zealand dollar were trading at .51 ​, what would be the riskless profit per U.S. dollar​ invested?

Although the Soviet Union continued to increase its number of ICBMs through the late 1960s and into the 1970s, the U.S. kept its number of conventional missiles roughly constant. Instead the U.S. worked to create so-called "MIRVs". What advantage did this technology provide to the U.S.?

how does the exchange rate and trade deficit or surplus affect a countries economic well- being? In what situations is the U.S. harmed/ benefited from the various positions of each ( high trade deficit with a weak U.S. dollar trade surplus with a strong U.S. dollar. etc.)