Suppose the Home firm is considering whether to enter the Foreign market. Assume that the Home firm
Question:
Fixed costs = $140
Marginal costs = $10 per unit
Local price = $25
Local quantity = 20
Export price = $15
Export quantity = 10
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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Related Book For
International Economics
ISBN: 978-1429278447
3rd edition
Authors: Robert C. Feenstra, Alan M. Taylor
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