Suppose a U.S.-based producer of high-quality baseball bats is...

Question

# Suppose a U.S.-based producer of high-quality baseball bats is...

Suppose a U.S.-based producer of high-quality baseball bats is contemplating expanding sales to Japan. In the U.S., the firm faces a demand elasticity of η = -1.5 and maximizes profit by setting the price at \$75/bat. In Japan, the bat maker will face a demand elasticity of η = -2 and will also incur a competitive transportation cost of \$10/bat. In order to maximize profit, what price should the bat maker set in Japan?

a. \$50

b.\$55

c.\$60

d.\$65

e\$70

f.\$75

g.\$80

h.\$85

I .\$90

j.\$95

k.\$100

L.\$105

M.\$110

N,\$115

O\$120

PNone of the above

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