Question:What are the explanations and advantages of free trade that the new theories of international tradegive?The international monopoly of the drone market is held by an American firm. Its averageproduction cost is given by the following function: CME = (5000-3Q) / 10China is considering setting up a firm with the average cost function:CMC = (3500 - 3Q) / 10The international request is written: DM = 1000 - p and the only Chinese request is written: DC =500– 0.5 pA. Characterize the equilibrium in a monopoly situation when the American firm is alone in theworld market.B. Describe the equilibrium in the event that China sets up a drone production industry (assumethat Chinese production remains modest - close to 0 - in the event of entry).C. What policy would improve the balance for China and for the world as a whole, if the UnitedStates were excluded? Characterize this balance. Explain and comment.D. Represent all the equilibrium situations on a single graph.

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Economics

What are the explanations and advantages of free trade that the new theories of intermational trade give?

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter18: International Trade And Comparative Advantage

Section: Chapter Questions

Problem 6DQ

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