Unformatted text preview: 1 , where p 1 and Q 1 are price and total output sold in country 1 respectively. p 2 = 100 - Q 2 , where p 2 and Q 2 are price and total output sold in country 2 respectively. J = 5 1) Calculate the profit maximizing levels of output at home and abroad for each firm. Calculate the market price in each country and total profits for each firm. 2) Are firms “dumping” their product in the foreign country’s market? Justify. (II) Suppose now countries do not trade with each other (i.e. they are in autarky) so a single firm operates in each country as a monopolist. (1) Calculate quantities sold in each country and market price. (2) Compare World Welfare under autarky and free trade....
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This note was uploaded on 10/23/2009 for the course ECON ECON 467 taught by Professor Mariamuniagurria during the Fall '09 term at University of Wisconsin.
- Fall '09