A US Company and a Japanese Company Sells an Identical Product

Multiple Choice

A U.S. company and a Japanese company sells an identical product in the Japanesemarket. The inverse demand equation for this product is P_J = 5 !0.2(Q_JUS + Q_{J J}) .Suppose that the best-response functions of the U.S. and Japanese companies are Q_JUS = 5 !0.5Q_{J J} and Q_{J J} = 7.5 !0.5Q_JUS, respectively. The price of this product in the Japanese market is:

A) Around $1.67.
B) Around $2.33.
C) Around $2.67.
D) Around $3.33.
E) None of the above.