Microeconomics (7th Edition)
Microeconomics (7th Edition)
7th Edition
ISBN: 9780134737508
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Chapter 16, Problem 16.2.5PA

Lexmark charges lower prices for its printer cartridges in some foreign countries than it charges in die United States. An article in the Wall Street Journal explained how a company in West Virginia bought Lexmark printer cartridges from retailers in foreign countries and resold the cartridges for higher prices in the United States.

a. What must Lexmark be assuming about the price elasticity of demand for printer cartridges in the United States relative to the price elasticity of demand for printer cartridges in these foreign countries?

b. Is Lexmark likely to be able to continue to price discriminating in this way? Briefly explain.

Source: Daniel Hemel and Lisa Larrimore Ouellette, “How “Price Discrimination’ Helps Less-Affluent Countries,” Wall Street Journal, March 20, 2017.

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