In Figure (below), the pharmaceutical firm will: A) charge higher prices in the

ID: 1216953 • Letter: I

Question

In Figure (below), the pharmaceutical firm will:

A) charge higher prices in the U.S. but sell larger quantities in Mexico than in the U.S..

B) charge higher prices in the U.S. and sell larger quantities in the U.S than in Mexico.

C) charge lower prices in the U.S. but sell larger quantities in Mexico than in the U.S.

D) charge lower prices in the U.S. and sell lower quantities in Mexico than in the U.S.

In Figure 2 (below), if MC falls, the pharmaceutical firm will:

A) reduce prices in both countries.

B) reduce prices in Mexico but keep them high in the U.S..

C) reduce prices in the U.S. but leave them unchanged in Mexico

D) raise prices in both countries to increase profits.

If drugs that were sold in Mexico could be easily re-imported to the United States:

A) Drug prices would fall by equal amounts in each country.

B) Drug prices would fall in the United States but remain the same in Mexico.

C) Drug prices in both countries would rise by equal amounts.

D) Mexican drug prices would rise by a much larger percentage than U.S. drug prices would fall.

1. B) charge higher prices in the U.S. and sell larger quantities in the U.S than in Mexico.

2. A) reduce prices in both countries.

3. B) Drug prices would fall in the United States but remain the same in Mexico.

No explanation required because answers are evidend from the graph.

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