After having started a highly unpopular war in Europe, the president of Leninslavia can only sell his country's gas to two other friendly countries, which, in turn, are not sold gas by anybody else. These friendly countries are the poor nation of Kalininburg (KB) and the richer, morally-ambiguous Coconut Republic (CR). Given the geographical proximity between the two buyers, a strict ban on cross-border sales was agreed with the Kalinian government. The respective demand functions (in million units) for both countries are: QKB=10-PKB QCR=14-0.5PCR The total cost (TC), in millions too, depends on the total amount of units produced Q = QKB + QCR and also includes 10 million of fixed costs. TC follows the expression:
After having started a highly unpopular war in Europe, the president of Leninslavia can only sell his country's gas to two other friendly countries, which, in turn, are not sold gas by anybody else. These friendly countries are the poor nation of Kalininburg (KB) and the richer, morally-ambiguous Coconut Republic (CR). Given the geographical proximity between the two buyers, a strict ban on cross-border sales was agreed with the Kalinian government. The respective demand functions (in million units) for both countries are: QKB=10-PKB QCR=14-0.5PCR The total cost (TC), in millions too, depends on the total amount of units produced Q = QKB + QCR and also includes 10 million of fixed costs. TC follows the expression:
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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