+1-415-670-9189
info@expertsmind.com
Prot of the domestic rm and the prot of one foreign rm
Course:- Business Economics
Reference No.:- EM13891965




Assignment Help
Assignment Help >> Business Economics

1. Consider a country, called Home, with one domestic rm competing with n foreign rms.

All the rms sell a homogeneous product and the demand in Home is p = a - bY where Y = yd +nyf .The domestic cost of producing one unit is c and the foreign cost of producing one unit is cf . The foreign rm must also incur an international cost equal to t per unit in order to sell in Home.

(i) Write the prot functions for one domestic and for one foreign rm.

(ii) If all these rms compete in quantity (Cournot competition), derive the equilibrium quantity produced by the domestic rm, the quantity produced by each foreign rm, the equilibrium price, the prot of the domestic rm and the prot of one foreign rm.

(iii) What is the impact of an increase in the number of foreign rms on the quantity sold per rm? Is there a dierence between the domestic and a foreign rm? Does the total quantity sold by foreign rm rise or fall? Explain.

(iv) Suppose now that t changes, what is the impact on the quantity sold per rm and on the prot per rm? Is there a dierence between domestic and a foreign rm? Explain.

(v) Suppose domestic welfare is dened as W = CS + d, where CS is the consumer surplus and d is the domestic rm prot. What is the impact of an increase in t on the consumer surplus? Given your answer to (iv), what do you then expect the impact of an increase in t on domestic welfare? Explain.




Put your comment
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Business Economics) Materials
At the beginning of June, Bezco Toy Company budgeted 5,000 toy action figures to be manufactured in June at standard direct materials and direct labor costs as follows: Direct
In the Clean Air Act as amended, Congress allowed California, which has serious problems with air quality, to adopt its own standards for emissions from cars and trucks, subje
You are a currency trader that is always seeking to make triangular arbitrage profits in the FX market. You notice the following quotes by three different banks today. Determi
Use terms for direction and timing to characterize the movement of the nominal interest rate over the macroeconomic cycle. Detail you explanation by reference to the Keynesi
Suppose that, in a bold move, the owners of the movie theater in Moscow decide to raise the price of general admission movie tickets from $7 to $9. Calculate the price elastic
What is the auditor's responsibility when there is a substantial going concern issue? Which of the following statements is omitted from nonpublic company audit reports? When i
Explain how the market for corn would be affected if ethanol, a corn derivative, was used to fuel cars in the united States. How would the market be effected if new technology
In each of the following examples determine (1) the market in question; (2) whether a shift in demand or supply occurred the direction of the shift and what induced the shift;