Suppose that in monopolistic competition, the number of firm affects market price (P) and average cost (AC) for a firm with the following way below. 
P=c+1/nb and AC=c+nF/S
and 
where c is marginal cost, n is number of firms, b is the demand parameter, F is fixed cost, S is market share etc.
And currently, c=5000; F=750,000,000; b=1/30,000; S1=900,000; S2=1,600,000; S3=3,750,000 where S1 is market share for Country 1, etc.
Identify if there is an economies of scale existed and consumers having better off with free trade.

4. Suppose that a demand for and supply of a product for Home and Foreign are given as follows: 
Home: D = 100-20P; S=20+20P; 
Foreign D* = 800 – 200P, S* = 400 + 200P. 
Analyze the welfare effect if the government adopts a tariff of $0.5 per unit imported in order to protect Home producers. 

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