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Pricing with Market Power

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Please help me so I can complete the assignment:

Prepare a 400- to 700-word report that describes the profit-maximizing prices Aveta Labs should charge for Taziclor in Europe and the United States. Include the following in your report:

Identify the prices that maximize profits in Europe and the United States.

Explain why the prices and price-cost margins (i.e., Lerner indexes) are different in each market; in particular, explain how the price sensitivity in each market relates to the price level.

Critique the suggestions from Brendan Flaherty and Jason Womack, as described in the e-mail from Michael Dellucci.

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The profit maximizing price in the United States is $12. When the price of Tanziclor is $12 the quantity sold in the US market is 5070, the total revenues is $60,836, the fixed cost is $8,000, the variable cost is $10,139, the total cost is $18,139, the marginal revenue is $2.00, the Marginal cost is $2.00 and the profit is $49,697. The profit maximizing level is the one where the marginal cost is equal to marginal revenue and in this case the marginal cost of $2.00 is equal to the marginal revenue $2.00. Also this level of price is within the acceptable range of $2 to $15.

The profit maximizing price in the Europe is $8. When the price of Tanziclor is $8 the quantity sold in the Europe market is 3,590, the total revenues is $28,717, the fixed cost is $5,000, the variable cost is $10,769, the total cost is $15,769, the marginal revenue is $3.00, the Marginal cost is $3.00 and the profit is $12,948. The profit maximizing level is the one where the ...

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