If the Japanese demand for computers is elastic and the Canadian demand for computers is inelastic, a profit-maximizing firm would charge a higher price to Canadian buyers than to Japanese buyers.

Question

Quizplus · Accepted Answer

If the demand for computers is more elastic in Japan, then a higher price will result in a greater decrease in quantity demanded, and so the firm will be more likely to charge a lower price to Japanese buyers to maximize profits. On the other hand, if the demand for computers is more inelastic in Canada, then a higher price will result in a relatively smaller decrease in quantity demanded, and so the firm may be able to charge a higher price to Canadian buyers to maximize profits.

If the Japanese Demand for Computers Is Elastic and the Canadian