Managerial Economics: Applications, Strategy and Tactics 12th Edition by James McGuigan, Charles Moyer, Frederick Harris

Exercise 1

The price elasticity of demand for a textbook sold in the United States is estimated to be 2.0, whereas the price elasticity of demand for books sold overseas is 3.0. The U.S. market requires hardcover books with a marginal cost of $40; the overseas market is normally served with softcover texts on newsprint, having a marginal cost of only $15. Calculate the profit-maximizing price in each market.
[Hint: Remember that MR = P( 1 +1/ED)]