Question
Warsteiner, a German brewery, is thinking about expanding its operations to export its beer to Cuba.Assume that Warsteiner has the following costs and demand information:
Warsteiner, a German brewery, is thinking about expanding its operations to export its beer to Cuba.Assume that Warsteiner has the following costs and demand information:
Fixed cost = 405
Marginal cost = 4 per case of beer
Local price =15 per case
Local quantity = 1,789
Export price =10
Export quantity = 4
a) Calculate the firm's profit from selling to BOTH markets.
b)Should Warsteiner enter the Cuban market? Briefly explain why.
c) Using the DOC's first method of determining fair market value (using the home price of the product), what is the dumping margin if Warsteiner decides to enter the Cuban market?
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