Question

niversal Studios sold the Mamma​ Mia! DVD around the world. Universal charged​ $21.40 in Canada and​ $32 in Japanlong dashmore than the​ $20 it charged in the United States. Assume​ Universal's marginal cost of production​ (m) is ​$1.20. Determine what the elasticities of demand must be in Canada and in Japan if Universal is profit maximizingLOADING.... The elasticity of demand in Canada must be epsilon Subscript Upper Cequals nothing. ​(Enter a numeric response using a real

Answer 1

Step-by-step explanation:

Lerner Index = -1 / Elasticity of demand = (P - MC) / P

(1) Canada:

- 1 / Ec = (21.4 - 1.20) / 21.4

- 1 / Ec = 20.2 / 21.4

- 1 / Ec = 0.9344

Ec = -1 / 0.9344

Ec = - 1.059

(2) Japan:

Lerner Index = -1 / Elasticity of demand = (P - MC) / P

- 1 / Ej = (32 - 1.2) / 32

- 1 / Ej = 30.8 / 32

- 1 / Ej = 0.9625

Ej = -1 / 0.9625

Ej = - 1.039