M5 Consider 2 countries, Home and Foreign, whosemarket size is SH = 900.000 and SF = 1.600.000.The demand curve of the industry i isQi = S (1 /n- 30000 (Pi – P-)And the total cost function is CT = 750,000,000 +5,000Q(a) Derive the equilbrium price in the longrun and the number of varieties in the long run atHome and at Foreign in AUTARKY. (b) Derive theequilbrium price in the long run and the number ofvarieties in the long run at Home and at Foreign inFREE TRADE. (c) Compare (a) y (b) and show thatboth countries are better off with free trade.

*Answer: The general demand (dd) function is: Q = S[1/n – b(P – Pavg)] Where, Q is the sale of an…

countries, Home and Foreign, whose is SH = 900.000 and SF = 1.600.000. d curve of the industry i is n- 30000 (Pi – P-) | al cost function is CT = 750,000,000 + Derive the equilbrium price in the long number of varieties in the long run at at Foreign in AUTARKY. (b) Derive the price in the long run and the number of the long run at Home and at Foreign in E. (c) Compare (a) y (b) and show that ries are better off with free trade.

countries, Home and Foreign, whose is SH = 900.000 and SF = 1.600.000. d curve of the industry i is n- 30000 (Pi – P-) | al cost function is CT = 750,000,000 + Derive the equilbrium price in the long number of varieties in the long run at at Foreign in AUTARKY. (b) Derive the price in the long run and the number of the long run at Home and at Foreign in E. (c) Compare (a) y (b) and show that ries are better off with free trade.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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