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B- Suppose that for a firm in the textile industry: • Total fixed costs (start-up costs of factories, capital equipment, and so on) are $20 million and • variable costs = $100 per item. • Because

B- Suppose that for a firm in the textile industry:

• Total fixed costs (start-up costs of factories, capital equipment, and so on) are $20 million and

• variable costs = $100 per item.

• Because more firms increase competition in the market, the market price falls as more firms enter

P= 100 + (60/n)

where n represents the number of firms in a market.

• size of the Chinese textile market is 27 million

• size of the Brazilian textile market is 3 million

1- What will be the equilibrium number of firms in the Chinese and Brazilian automobile markets without trade?

2-What will be the equilibrium number of firms after trade?

3-What will be the outcome of free trade under monopolistic competition?

May 03 2021 View more View Less

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