Chapter $16$ Problems & Applications

$9.$ Problems and Applications Q$9$

Only one firm produces and sells soccer balls in the country of Wiknam, and as the story begins, international trade in soccer balls is prohibited. The following equations describe the monopolist's demand, marginal revenue, total cost, and marginal cost:

Demand: $,P=15-Q$

Marginal Revenue: $MR=15-2Q$

Total cost: $,TC=3+Q+0\mathrm{.}5Q^2$

Marginal Cost: $,MC=3+Q$

where $Q$ is quantity and $P$ is the price measured in Wiknamian dollars.

The monopolist produces $$ soccer balls and sells them at a price of $$ each. The monopolist's profit is $$ in this case.

One day, the King of Wiknam decrees that henceforth there will be free trade$-$either imports or exports$-$of soccer balls at the world price of $$10.$ The firm is now a price taker in a competitive market.

The domestic production of soccer balls will $q,$ to $$ soccer balls, and domestic consumption will $$ to $$ soccer balls. Therefore, Wiknam will $$ Soccer balls in this case.

In the analysis of international trade in Chapter $9,$ a country becomes an exporter when the price without trade is below the world price and an importer when the price without trade is above the world price.

In this case, the price without trade is $$ than the world price, and the country is an $-$ This is because the claim made in