Question 2 Suppose that a Chinese solar panel manufacturer has an upward sloping marginal cost function given by MC = 10 Q where Q is the total number of solar panels produced by this firm. Denote the number of panels sold in the Chinese market by QH and the number of panels sold in the US market by QF. The firm faces a downward sloping demand curve in the Chinese market given by PH 750-5 QH. It faces a horizontal demand curve in the US market at a price of 500. That is, it can sell any number of panels in the US market at that price. a) b) c) d) market? How many panels will the firm sell in each market? What is the profit maximizing price of the panels it charges in the Chinese Is the price in the Chinese market higher or lower than in the US market? Will this qualify as dumping? Question 3 ) Show the results diagrammatically. Here is a list of products: rice, wheat, gold, automobiles, golf clubs, wine, movies. For each of these products explain whether you expect the trade to be inter-industry trade or intra-industry trade?

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