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Suppose the North American market for combat tanks (T) is supplied by Hurtem Inc., a single defense contractor. Suppose that the indirect demand functions of
Suppose the North American market for combat tanks (T) is supplied by Hurtem Inc., a single defense contractor. Suppose that the indirect demand functions of its two North American buyers, US and Canada, are given by: PU = 100 - TU PC = 100 - 2TC Where TU and TC are the quantities demanded by the US and Canada respectively. Suppose that Hurtem Inc.'s marginal costs and average costs are constant at MC = AC = 20. A. (10 pts) If Hurtem Inc. behaved as an ordinary single-price monopolist and had to sell based on the combined market demand from the two markets what would be its (i) profits, and (ii) the total consumer's surplus for North America? Show analysis
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