You have two factories that produce identical products (lets say plastic forks).The plants and equipment are fully depreciated and there are no fixed costs. Note, this is a competitive market.

As a result, your cost basis in the USA is TC_usa = 8Y_usa²

your cost basis in CHINA is TC_china = Y_china²

The demand for plastic forks is Y=90

Note, the production then becomes Y = Y_usa + Y_china = 90

a.With no restrictions (competitive markets exist) how many plastic forks will the USA produce? 3 Points

b. How much would China need to lower their cost to produce all of the 90 plastic forks?0.5 Points

c. How much of a subsidy would the firm need to produce all 90 plastic forks in the USA, given the original TC functions? 0.5 Points