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In the "Reaction Function" Diagram of Question #18 Above, If

question 9

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In the "reaction function" diagram of Question #18 above, if the firms are at point A and if both firms are seeking to maximize profit, the foreign firm wants to __________ its sales in this market, and the home firm __________its sales in this market.


Definitions:

Next-best Activity

The alternative that must be forgone to engage in a particular activity, representing the opportunity cost of that decision.

Economics

The social science that studies how individuals, governments, firms, and nations make choices on allocating resources to satisfy their wants and needs.

Business Cycle

The business cycle refers to the fluctuations in economic activity and growth that an economy experiences over time, marked by periods of expansion and contraction.

Economic Activity

entails the production, distribution, and consumption of goods and services in an economy.

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