If the demand curve for Pfizer's Norvasc, a blood pressure medication, is more elastic in Mexico than it is in the United States, how could Pfizer use this information to maximize their profits?
A) They could segment the markets and charge a lower price for Norvasc in Mexico than in the United States.
B) They could segment the markets and charge a higher price for Norvasc in Mexico than in the United States.
C) Since Mexico is a poorer country than the United States, in this situation it makes more sense for Pfizer to charge only one price in both countries.
D) They could choose to sell Norvasc only in the United States.

Question

Quizplus · Accepted Answer

When the demand curve for Norvasc is more elastic in Mexico, it means that consumers in Mexico are more sensitive to changes in price than consumers in the United States. Therefore, by segmenting the markets and charging a lower price for Norvasc in Mexico, Pfizer can increase its sales and revenue in the Mexican market without affecting its sales in the United States. This strategy is known as price discrimination and can help Pfizer maximize its profits by charging different prices in different markets based on the willingness and ability of consumers to pay.

If the Demand Curve for Pfizer's Norvasc, a Blood Pressure