A U.S. company and a Japanese company sells an identical product in the U.S. market. The inverse demand equation for this product is PUS = 5 !0.2(QUSUS + QUS J) . Suppose that the best-response functions of the U.S. and Japanese companies are QUSUS = 10 !0.5QUS J and QUS J = 7.5 !0.5QUSUS, respectively. Consumer surplus in the U.S. market is:
A) Around $25 million.
B) Around $30 million.
C) Around $41.5 million.
D) Around $50 million.
E) Around $67 million.
Correct Answer:
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