Answer to Question #96474 in Microeconomics for Saad Ali

Question

You are a manager of a fertilizaer company desperate to boost sales by offering heavy discounts on fertilizers to overcome negative perceptions created in the stock market by declining sales. You have a large consignment of fertilizers at warehouse that will be expiring soon and have to decide whether to ship it Country-A or Country-B.
●Country-A: Farmers in country A use relatively High levels of fertilizers in growing crop XYZ.
●Country-B: Farmers in country B use relatively low levels of fertilizers in growing crop XYZ.
Both regions will be offered an identical discounted price, but due to high shipping costs, you can only ship to one region. ALL unsold fertlizer bags will be destroyed due to high shipping costs (Or You may assume they will expire if not sold in the country you shipped)

Answer 1

Solution:

It is necessary to sell the entire batch of fertilizers to country B.

Since in country A, farmers who are used to paying a high price for everything used in production will have a psychological barrier if they are offered fertilizers at a low price.

Farmers from country B will acquire quite a lot of these fertilizers, since the price will be within the range acceptable for them. Consequently  disposal will be minimal.

Ansver: B