Microsoft sells a special version of its Windows operating system at a low price in countries where cheap pirated software is widespread. Since the cost of producing another copy of this software is the same as the cost of producing another copy of the regular Windows product, why is Microsoft charging this lower price?
A) It is trying to take advantage of the different demand elasticities in the different countries.
B) The price differential is explained by the lower cost to develop the new software.
C) The price differences are due to differences in cost among countries.
D) The differential pricing reflects the differences in the barriers to entry.

Question

Quizplus · Accepted Answer

Microsoft charges a lower price in countries with widespread piracy to capture more of the market by taking advantage of different demand elasticities, making the legal version more attractive compared to pirated copies.

Microsoft Sells a Special Version of Its Windows Operating System