Which consumers are obsessed with the consumption

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Consider a world with two countries, A and B, in which consumers are obsessed with the consumption of YokiPooki, which is considered to be the latest and greatest in VR entertainment. The two counties are identical: each has an aggregate demand for YokiPooki given by 1000−p, and two firms producing this service. YokiPooki is produced at a constant marginal cost of $10 per unit by the firms in country A and at a constant marginal cost of $20 per unit by the firms in country B. The firms in each country are fully owned by consumers in that country. Initially, there is no international trade between countries, so each firm can sell only in its own country. What is the equilibrium quantity of YokiPooki produced by each firm in country A? What is the equilibrium quantity of YokiPooki produced by each firm in country B? After some negotiations, the two countries sign a trade agreement and agree to have YokiPooki bought and sold in a single world market (with a common world price for YookiPooki). What is the equilibrium level of YokiPooki produced by each firm in country A? What is the equilibrium level of YokiPooki produced by each firm in country B? After the law is passed, lobbyists for the firms in country B convince politicians to keep the world market, but introduce a tax of $10 per unit on YokiPooki sold by firms from country A, regardless of where their sales take place. What is the equilibrium level of YokiPooki produced by each firm in country A? What is the equilibrium level of YokiPooki produced by each firm in country B?

Reference no: EM131089565

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