Consider a firm sells its product in two different countries. It needs to decide what quantities...

 

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Consider a firm sells its product in two different countries. It needs to decide what quantities to be sold in Country 1 (9₁) and Country 2 (92). The inverse demand functions are p₁ 60 - 0.59₁ in Country 1 and p2 = 90 - 92 in Country 2. Then, its total revenue function will be: = R(9₁,92) = R₁ (9₁) + R₂ (92) = (60 - 0.5q₁)q₁ + (90-92)92 = 609₁ - 0.5q1 +9092 - 9/² Suppose the firm has a constant per unit cost of c = 10, regardless of the country where the goods are sold. So, its total cost function is given by C(q₁, 92) = 10(9₁ +92). Therefore, the firm's profit function is T(9₁, 92) = R(q₁, 92) - C(9₁, 92) = 50q₁0.5q1 + 8092 - 9² The firm's problem is to choose the optimal output levels in each country (9₁, 92), that maximizes its total profit. Consider a firm sells its product in two different countries. It needs to decide what quantities to be sold in Country 1 (9₁) and Country 2 (92). The inverse demand functions are p₁ 60 - 0.59₁ in Country 1 and p2 = 90 - 92 in Country 2. Then, its total revenue function will be: = R(9₁,92) = R₁ (9₁) + R₂ (92) = (60 - 0.5q₁)q₁ + (90-92)92 = 609₁ - 0.5q1 +9092 - 9/² Suppose the firm has a constant per unit cost of c = 10, regardless of the country where the goods are sold. So, its total cost function is given by C(q₁, 92) = 10(9₁ +92). Therefore, the firm's profit function is T(9₁, 92) = R(q₁, 92) - C(9₁, 92) = 50q₁0.5q1 + 8092 - 9² The firm's problem is to choose the optimal output levels in each country (9₁, 92), that maximizes its total profit.

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