Question
Consider a multinational corporation with sales in 2 countries. Let q_i denote the amount that it sells in country i, and the price p_i at
Consider a multinational corporation with sales in 2 countries. Let q_i denote the amount that it sells in country i, and the price p_i at which its products sell in country i. The firm has a one-of-a-kind product, and thus acts as a monopolist in every country. Assume also that consumers have to buy directly from the firm. Aggregate inverse demand in country 1 is given by 1000 - q_1. Aggregate inverse demand in country 2 is given by 1000-2q_2.
Suppose that all of the product is manufactured a single factory in country 1, with a cost function given by. Also the firm is fully owned by consumers in country 1.
What is the total amount of the product sold in both countries?
What is total consumer surplus in country 2?
What is total consumer surplus in country 1?
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