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Consider a television manufacturer based in Korea. It produces TVs in Korea at a total cost of Y 2 + 2Y where Y is the number of televisions they produce in Korea. It can also produce TVs in Japan at a cost of 3Z2 where Z is the number of televisions they produce in Japan.1 The company sells TVs in Japan where it faces a demand of:
P*= 2; 000 - 2Q*:
The demand in Korea is
P* = 1; 000 - 2Q:
Transport costs are 100 per unit. The fixed cost of becoming a multinational is 2,500.
Calculate Korean production, Japanese production, exports, the Korean price, the Japanese price, and profits.
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