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, Russianchildren 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 (Dr) and Russia (DR) and marginal revenue curves in France (MRF) andRussia (MRR). Le Jouet's marginal cost of production (MC), depicted as the grey horizontal line in both graphs, is $12, and the resale of toy trainsfrom Russia to France is prohibited. Assume there are no fixed costs in production, so marginal cost equals average total cost (ATC).PRICE (Dollars per toy train)40363228Total24201612840CountryFranceRussiaFranceMRPrice(Dollars per toytrain)20202 4 6 8 10 12 14 16 18 20QUANTITY (Millions of toy trains)N/AO TrueMC-ATCOFO FalseN/A(?)Single PriceQuantity Sold(Millions of toytrains)PRICE (Dollars per toy train)40363228242016Suppose that as a nondiscriminating seller, Le Jouet charges the same price of $20 per toy train in each of the two markets.12In the following table, complete the third column by determining the quantity sold in each country at a price of $20 per toy train. Next, complete thefourth column by calculating the total profit and the profit from each country under a single price.840Profit(Millions ofdollars)RussiaD₂MR₂02 4 6 8 10 12 14 16 18 20QUANTITY (Millions of toy trains)Price(Dollars per toytrain)N/AMC-ATCLe Jouet charges a higher price in the market with a relatively elastic demand curve.True or False: Under price discrimination, Le Jouet is not dumping toy trains into the Russian market.(?)Suppose that as a profit-maximizing firm, Le Jouet decides to price discriminate by charging a different price in each market, while its marginal cost ofproduction remains $12 per toy.Price DiscriminationQuantity Sold(Millions of toytrains)N/AComplete the last three columns in the previous table by determining the profit-maximizing price, the quantity sold at that price, the profit in eachcountry, and total profit if Le Jouet price discriminates.Profit(Millions ofdollars)

Demand measures the willingness and the ability of the individual to pay for the commodity. The…

In the following table, complete the third column by determining the quantity sold in each country at a price of $20 per toy train. Next, complete the fourth column by calculating the total profit and the profit from each country under a single price. Country France Russia Total Price (Dollars per toy train) 20 20 N/A True Single Price Quantity Sold (Millions of toy trains) False N/A Profit (Millions of dollars) Price (Dollars per toy train) N/A Price Discrimination Quantity Sold (Millions of toy trains) N/A Suppose that as a profit-maximizing firm, Le Jouet decides to price discriminate by charging a different price in each market, while its marginal cost of production remains $12 per toy. Profit (Millions of dollars) Complete the last three columns in the previous table by determining the profit-maximizing price, the quantity sold at that price, the profit in each country, and total profit if Le Jouet price discriminates. Le Jouet charges a higher price in the market with a relatively elastic demand curve. True or False: Under price discrimination, Le Jouet is not dumping toy trains into the Russian market.

In the following table, complete the third column by determining the quantity sold in each country at a price of $20 per toy train. Next, complete the fourth column by calculating the total profit and the profit from each country under a single price. Country France Russia Total Price (Dollars per toy train) 20 20 N/A True Single Price Quantity Sold (Millions of toy trains) False N/A Profit (Millions of dollars) Price (Dollars per toy train) N/A Price Discrimination Quantity Sold (Millions of toy trains) N/A Suppose that as a profit-maximizing firm, Le Jouet decides to price discriminate by charging a different price in each market, while its marginal cost of production remains $12 per toy. Profit (Millions of dollars) Complete the last three columns in the previous table by determining the profit-maximizing price, the quantity sold at that price, the profit in each country, and total profit if Le Jouet price discriminates. Le Jouet charges a higher price in the market with a relatively elastic demand curve. True or False: Under price discrimination, Le Jouet is not dumping toy trains into the Russian market.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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