International Economics 13th Edition by Robert Carbaugh

تمرين 10

Figure 5.6 illustrates the practice of international dumping by British Toys, Inc. (BTI). Figure 5.6(a) shows the domestic demand and marginal revenue schedules faced by BTI in the United Kingdom (UK), and Figure 5.6(b) shows the demand and marginal revenue schedules faced by BTI in Canada. Figure 5.6(c) shows the combined demand and marginal revenue schedules for the two markets, as well as BTI's average total cost and marginal cost schedules.
a. In the absence of international dumping, BTI would charge a uniform price to UK and Canadian customers (ignoring transportation costs). Determine the firm's as total profit. How much profit accrues to BTI on its UK sales and on its Canadian sales?
b. Suppose now that BTI engages in international dumping. Determine the price that BTI charges its UK buyers and the profits that accrue on UK sales. Also determine the price that BTI charges its Canadian buyers and the profits that accrue on Canadian sales. Does the practice of international dumping yield higher profits than the uniform pricing strategy? If so, by how much?