Question 2 (26 points) Discriminating Monopoly: Consider a Foreign monopolist selling both to its local market and exporting to Home. In its local market, this monopolist faces the following inverse demand equation: p* = 100-20* where P* and (" are the local price and quantity. In the export market, this Foreign firm faces competition from other firms selling to the Home market, thus this Foreign firm faces an export demand curve (D = M R) that is horizontal in the export price P = $40. 2 Finally, assume that the marginal cost (MC*) and total variable cost (VC*) of the Foreign monopolist are given by the following equations: MC =0+20 VC* = Q2 where Q is the total quantity produced. This firm has fixed costs FC of $600. (a) Suppose that this firm serves both the local and export market. Calculate the total quantity produced, such that this monopolist maximizes its profits. (5 points) (b) Calculate the quantity sold in its local market and the quantity exported to the Home country. (3 points) (c) Calculate the total average cost of producing to both markets. (5 points)(d) Compute the total profits. (6 points) (e) Under the rulings of the WTO, the Home country can apply an antidumping tariff (r) to the Foreign monopolist. This tariff is calculated as the difference between the price charged by the Foreign monopolist in its local market, and the export price, thus r = P* - P. With this definition, compute the antidumping tariff that Home country can apply to the Foreign monopolist. (5 points)