A Weapons Producer Sells Guns to Two Countries That Are

question 55

Essay

A weapons producer sells guns to two countries that are at war with each other.The guns can be produced at a constant marginal cost of $10.The demand for guns from the two countries can be represented as:
Q_A = 100 - 2p
Q_B = 80 - 4p
Why is the weapons producer able to price discriminate?
What price will it charge to each country?

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