Japanese firms and Chinese firms are competing in a single market. The cost function of a Japanese firm is TC₁(Q)=8+2Q² and the cost function of a Chinese firm is TC₂ (Q)=16+Q². Which of the following statements are correct about the long run equilibrium:

i.   Chinese firms will produce more units than Japanese firms.
ii. Japanese firms will produce q=0.

a. Both statements are false.

b. Only statement i. is correct.

c. Both statements are correct.

d. Only statement ii. is correct.

Answer rating: 100% (QA)

The detailed answer for the above question is provided below The correct answer is a Both statements ... View the full answer