Homework answers / question archive / 2

2

Economics

Share With

2. Consider UCB Pharma, Belgium originated international pharma firm, found a vaccine against Covid-19 and would like to sell it only in Turkey and Belgium. Vaccines can be produced at a constant average cost of €10 per unit. The demand for vaccines in Turkey and Belgium is given by: PTURKEY = 50 -0.5Q PBELGIUM = 20 -0.25Q a. If UCB can charge different prices to each country, what price and quantity will it sell to each? b. If UCB cannot price discriminate, what price and quantity of guns will it sell to each country? c. Will UCB make more profit from price discriminating? Briefly explain. Why is it that the manufacturer will likely be able to price discriminate? d. Is the deadweight loss higher under price discrimination or a single-price? Show mathematically