Calculate the prices in both countries in trade equilibrium

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Reference no: EM13239569

Consider the Home country with the demand curve for apples given by
P = 20 - 2Q.
There is only one firm that produces apples at the marginal cost of $4 per kilo.

Assume that Home has started trading with the Foreign country, which is exactly the same:
it has the same demand curve and there is only one firm there that also produces apples at the marginal cost of $4 per kilo. Also, each firm in every country has to pay a transportation cost of $1 per kilo to deliver its apples to the market abroad.

In the trade equilibrium, calculate the prices in both countries.

Reference no: EM13239569

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