Suppose that domestic demand for a product is more inelastic than demand in the foreign country.A seller with market power would set a price in the foreign market that is ______ than the domestic price; this is an example of _________.

Question

Quizplus · Accepted Answer

When demand is more elastic in the foreign market, the seller can charge a lower price there to increase sales volume. This is an example of international price discrimination, where different prices are charged in different markets based on demand elasticity.

Suppose That Domestic Demand for a Product Is More Inelastic