view pic

9. Suppose there's a rm considering expanding to foreign. The demand it faces at home is P = 9 30 and the demand at foreign is P = 7-40. Given the technology the marginal cost is MC = 1, and the transport cost to more a unit of good across the two countries is r = 1. Fixed cost connected to R&D is F = 3 and the cost of a production plant is P: = 1. There are no other costs. Calculate the prots if a) the expansion of the rm is through a horizontal multinational and b) if it is through a vertical nmltinational. What will the rm choose