To maximize profit GlaxoSmithKline sets a higher price for Combivir in Europe than in Africa because the demand curve in Africa is:
A) lower and more inelastic.
B) lower and more elastic.
C) higher and more inelastic.
D) higher and more elastic.

Question

Quizplus · Accepted Answer

The demand curve in Africa is lower and more elastic, meaning that changes in price will have a greater impact on the quantity demanded. Therefore, GlaxoSmithKline can set a lower price in Africa and still sell a significant amount of Combivir, while in Europe they can set a higher price since the demand curve is higher and more inelastic, meaning that changes in price will have a smaller impact on quantity demanded. This allows GlaxoSmithKline to maximize their profits by charging different prices based on the elasticity of demand in each market.

To Maximize Profit GlaxoSmithKline Sets a Higher Price for Combivir