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?
PNone of the above
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