Consider the case of a Foreign monopoly with no Home production, and assume that at Home...

Consider the case of a Foreign monopoly with no Home production, and assume that at Home the inverse demand equation is given by: ? = −20? + 2,000 and the Foreign monopolist has a constant marginal cost of $500 (MC*=500).

a) Write the equation of the Marginal Revenue (MR)

b) Calculate the quantity and price of equilibrium before the imposition of the tariff

Now assume that the Home country imposes a tariff of $250:

c) Calculate the new price paid by Home consumers

d) Calculate the net-of-tariff price received by the Foreign monopolist

Please show work.

Solutions

Expert Solution

Rahul Sunny answered 1 month ago

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