Suppose the Home firm is considering whether to enter the Foreign market. Assume that the Home firm

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Suppose the Home firm is considering whether to enter the Foreign market. Assume that the Home firm has the following costs and demand:


a. Calculate the firm’s total costs from selling only in the local market.

b. What is the firm’s average cost from selling only in the local market?

c. Calculate the firm’s profit from selling only in the local market.

d. Should the Home firm enter the Foreign market? Briefly explain why.

e. Calculate the firm’s profit from selling to both markets    

f. Is the Home firm dumping? Briefly explain.

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International Economics

ISBN: 9781319218508

5th Edition

Authors: Robert C. Feenstra, Alan M. Taylor

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