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economics question 4, please help 4. A rm in country A produces a product with a marginal cost 0 = 90 but no xed cost.

economics question 4, please help

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4. A rm in country A produces a product with a marginal cost 0 = 90 but no xed cost. The demand for the product exists in country B, and the demand is given by p = 230 q, where p is the market price and q is the quantity. Consider and compare the following options of producing and supplying the product to country B. In each option, determine the market price, output level, and after-tax prot of the rm. There are no international transport costs. (a) (b) (C) (d) The rm produces in country A and then exports to B. [There is no demand for the product in A.] There is a prot tax of rate = 30 percent. The rm sets up a subsidiary in a third country, C, where there is no prot tax. The rm sells the product to the subsidiary, which will then re-export to B. There is a specic tari" for the import to C equal to t = 20 per unit. Determine which of these two options the rm prefers, assuming that it is interested in maximizing its prot. If the rm chooses the option in (b), what is the transfer price of the product om A to C? In the current trade war between the United States and China, the United States imposes tariffs on some goods imported from China, while China retaliates with its own tariffs on some goods from the United States. Some rms in the United States announced that they will move some of their production plants to China and some to some other countries. At the same time, not too many rms in China made similar announcement about moving their production plants to the United States. Make use of the "tariff-jumping FDI" argument to explain these phenomena

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