Document1-Word es Mailings Review View Help FOXIT PDF Tell me what you want to d

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Document1-Word es Mailings Review View Help FOXIT PDF Tell me what you want to do ART 1I Here are some challenging questions. Use economic reasoning to try to answer them. Remember that the objective of the Company is to maximize profit. 1. A foreign country has approached the Smith Company about selling the drug in that country. profit maximizing price. Under what conditions is it logical for the Company to sell its drug there? Be specific. However, the price would be regulated, and would be less than the 2. Is it logical for the monopoly company to advertise? (Before you answer, look at the monopoly graph and try to anticipate the probable effect, or lack of effect, of advertising). Explain your answer 3. If the Company can charge different customers different prices, could this add to the Company's profit? If so under what conditions? Explain your answer

Explanation / Answer

1. There could be a number of reasons for which Smith company can choose to operate in that country. One very important reason is to have benefits/adavantages from synergy in operations all over the subsidiaries where it is operating.

The company is operating in number of countries. Even if it operates in one country not at maximum profit, the operation in that country can increase its overall wealth or value of the organization. For example it can have various subsdiaries coordinated and integrated so that resources can be shared so from this country cheap resources can be transfeered to other subsidiaries and hence more margin can be earned. Thus the objective of increasing overall value of organization in achived here.

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