1. Suppose the following: I. Two countries each with demand for homogeneous goods given by P(Q) = 40 - Q In country A there is one firm with marginal cost of production of CA. III. In country B there is one firm with marginal cost of production of CB. Competition in relevant markets is Cournot IV. a) Find for each country expressions for the equilibrium price and equilibrium quantity and firm profits under the assumption that no occurred between the two countries occurred. b) Now assume a state of free trade occurs between the two countries. Derive expressions II.

1. Suppose the following: I. Two countries each with demand for homogeneous goods given by P(Q) = 40 - Q In country A there is one firm with marginal cost of production of CA. III. In country B there is one firm with marginal cost of production of CB. Competition in relevant markets is Cournot IV. a) Find for each country expressions for the equilibrium price and equilibrium quantity and firm profits under the assumption that no occurred between the two countries occurred. b) Now assume a state of free trade occurs between the two countries. Derive expressions II.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter19: Externalities And Public Goods

Section: Chapter Questions

Problem 19.3P

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