One Canadian-EU trade dispute centered on the Saskatoon Berry Product (q) sold b

Question

One Canadian-EU trade dispute centered on the Saskatoon Berry Product (q) sold by J.O. Sims. Suppose J.O. Sims sells the products in Australia and Europe, the demands in Australia and Europe are respectively given by qA = 120 - 6p and qE = 100-2p, and the total cost function is TC = 10q.

Suppose further that J.O. Sims can control the quantities supplied in each

market, how many should it sell in each market in

order to maximize total profits? What are these

profits?

(Hint: J.O. Sims has two variables but the

same marginal cost in both markets).

Explanation / Answer

the Profit= p*(120 - 6p) + p*(100-2p) - 10q So, q=qA+qE=120 - 6p + 100-2p =220-8p net profit= p*(120 - 6p) + p*(100-2p) - 10(220-8p) differentiate 120-12p+100-4p+80=0 p= 18.75 so, qA=120-6p=65.625=7.5 qE= 100-2p=62.5 Total profit= profit in Australia +Profit in Europe=(p-10)*(120 - 6p) +(p-10)*(100-2p) profit in Australia=65.625 Profit in Europe= 546.875 Total profit= profit in Australia +Profit in Europe=612.5

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