MANAGERIAL/ECON+BUS/STR CONNECT ACCESS
9th Edition
ISBN: 2810022149537
Author: Baye
Publisher: MCG
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Chapter 10, Problem 23PAA
To determine
To know: The strategy for improving company’s profit.
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6. Suppose Home is a small country and has a monopolist with Marginal cost 2q. The world price
is pw40. The Home inverse demand function is
P = 150 - Q.
(a) Find the Domestic Free Trade equilibrium outcome.
P =
(domestic) q =_
Imports
For the case of an industry that you know well, describe the extent to which firms in that industry are open to competition from international
consider a domestic monopoly in a small country that produces a good with the following inverse demand curve: P = 100 - 1/4Qd. The monopoly has marginal cost of MC = 20 + 1/2Q. In the absence of free trade, complete the following: A) Calculate the equilibrium price and quantity. B) Calculate the consumer surplus, producer surplus (note the shape), and total surplus. Now, suppose the home market opens up to free trade ant that the world price is $60 per unit. C) Calculate the home firm's quantity (supplied), home quantity (demanded), import quantity, and price. D) Calculate the consumer surplus, producer surplus, and total surplus. Now, suppose the home market opens up to free trade, but imposes a tariff of $10. E) Calculate the equilibrium price and…
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