A firm can sell its products in two countries. Quantity demanded in the first country is given by?
and in the second country
𝑄 = 99 − 𝑃
The firm’s total output is q+Q which it can produce at a total cost (TC) of
𝑇𝐶 = 50𝑞 + 50𝑄 + 𝑞𝑄 + 0.5𝑞^2 + 0.5𝑄^2
(i) the prices and outputs in each country that maximise profits
- OiyLv 611 months ago
The profit function is 99q-2q*2+ 99Q-Q*2-50q-50Q-qQ-0.5q*2-0.5Q*2
Take the first derivative under the assumption that q is constant, set to zero, and vice versa if Q is constant.