A domestic shoe company distributes running shoes and tennis shoes for $75 per pair. The marginal cost of producing a pair of running shoes is $40 and the marginal cost of producing a pair of tennis shoes is $45. A Chinese retailer offers to purchase running shoes for $45 per pair and tennis shoes for $55 per pair for distribution in China. Should the shoe company sell any shoes to the Chinese retailer? (Ignore any potential issues of bundling the two types of shoes together as part of the sale and any competitive effects that international sales might have on current domestic sales.)
Research and quote similar trade deals that might be more profitable if offered individually and not as a bundle..
