May 10, 2022 Uncategorized

Cost Analysis Worksheet assignment at an affordable cost

Question Description

I’m working on a economics exercise and need an explanation and answer to help me learn.

An American producer of steel produces and sells his products in two geographic regions: at home (H) and abroad (F). Demand in those markets is different. Also, production costs in those two regions are different. The demand function on the home market is PH = 260 – 0,1QH, and on the foreign market is PF = 240 (illimited amount can be sold for the price 240 dollars). Cost function on the home market is: CH = 1000 + 0,4Q2H, and on the foreign market: CF = 5000 + 0,25Q2F.

a)The products can not be exported due to high customs duties. Calculate the amount of production and prices on home and foreign markets to maximize profit. What will be the profit?
b)The company can export without limits and transport costs are low. Answer now the question from point a.
c) Now suppose that transport costs are 16 dol. per ton. Answer the question from point a.

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