You produce stereo components for sale in two markets, foreign and domestic, and the two groups of consumers cannot trade with one another. You will charge the higher price in the market with the:

Question

Quizplus · Accepted Answer

Charging a higher price in a market with a lower own price elasticity of demand (more inelastic demand) will result in a smaller decrease in quantity demanded in response to the higher price, leading to higher profits. If the market has a higher own price elasticity of demand (more elastic demand), a higher price will lead to a larger decrease in quantity demanded and may result in lower profits. The teenage population and consumer incomes are not directly related to the own price elasticity of demand, so they are not relevant to this decision.

You Produce Stereo Components for Sale in Two Markets, Foreign