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 U.S. market. The inverse demand equation for this product is P_US = 8 !0.4(Q_USUS + Q_{US J}) . Suppose that the best-response functions of the U.S. and Japanese companies are Q_USUS = 7.5 !0.5Q_{US J} and Q_{US J} = 9.375 !0.5Q_USUS, respectively. The price of this product in the U.S. market is:

A) Around $2.67.
B) Around $3.50.
C) Around $4.50.
D) Around $5.33.
E) None of the above.