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Q. Consider two firms facing demand curve P = 50 - 5Q, where Q = Q1 + Q2. firms' cost functions are C1(Q1) = 20 + 10Q1 and C2(Q2) = 10 + 12Q2. A. Suppose both firms have entered industry. What is joint profit-maximizing level of output? How much will each firm produce? How would your answer change if firms have not yet entered industry?
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In country B the opportunity cost of 100 gallons of beer is 0.95 tons of cereal. Both countries can experience gains from trade if the exchange rate for a ton of cereal is 96 gallons of beer
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