The demand for home firm product is given by the inverse demand function: P = 120 −QD. The company’s costs are: T C = 20Q+ 200 and MC = $20. 2. Suppose the home country open up to free trade and a foreign competitor enters the market. Assume that the foreign firm has the same cost structure as the home firm (the monopoly from the previous question). A) Derive the best response function for each firm (h-home and f-foreign) B) Find each firms’ output, the home market price, and each firms’ profit from the home market

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