Three countries engage in the production of flax (an agricultural product). The market for flax in each country is perfectly competitive. Producers within a country are identical, but they differ across countries. Each producer has a constant marginal cost up to a particular level of capacity. Throughout this analysis, let's assume that there is no transportation cost between the countries. The following table summarizes supply and demand information across these countries (where quantities are in units per year and prices are in dollars per unit): Country Marginal cost Total flax capacity of country. Market demand curve Country 1 $50/unit 100 units D(P) = 300 - P Country 2 $40/unit 200 units D(P) = 150 - P Country 3 $30/unit 200 units D(P) = 150 - P

Three countries engage in the production of flax (an agricultural product). The market for flax in each country is perfectly competitive. Producers within a country are identical, but they differ across countries. Each producer has a constant marginal cost up to a particular level of capacity. Throughout this analysis, let's assume that there is no transportation cost between the countries. The following table summarizes supply and demand information across these countries (where quantities are in units per year and prices are in dollars per unit): Country Marginal cost Total flax capacity of country. Market demand curve Country 1 $50/unit 100 units D(P) = 300 - P Country 2 $40/unit 200 units D(P) = 150 - P Country 3 $30/unit 200 units D(P) = 150 - P

Microeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter9: Price Takers And The Competitive Process

Section: Chapter Questions

Problem 16CQ

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