Plot the ac curve and the demand curve

Reference no: EM133486612

Case: Consider a situation in which two countries, Home and Foreign, can produce a good that is subject to external economies of scale. Assume that firms in both countries face the same average costs curve (AC), given by

AC = m+r/s+Q

where m=3, r=20, s=2 and Q indicates quantity. The demand curves are given by, respectively:

Home: Q= b-P

Foreign Q = b*-P

where b=20 and b*=40 . Q indicates quantity and P indicates price

Plot the AC curve and the demand curve for both Home and Foreign in the same graph (put quantity in the x-axis and price and cost in the y-axis.

Reference no: EM133486612

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