1. Suppose that fixed costs for a firm in the monopolistically competitive automobile indu $50 and that variable costs are equal to $50 per finished automobile ( marginal cost Because more firms increase competition in the market, the market price falls as more fir an automobile market, or specifically, P 50+ (20/n), wheren represents the number in a market. Assume the size of the U.S. industry is 1000. Use the internal economies theory to: (a) Calculate the equilibrum number of firms in the US uithout trade? (b) What is the equilbrium price of automobiles in the United States in autarky? (c) What is the equilibrium output per firm in the US in autarky?

1. Suppose that fixed costs for a firm in the monopolistically competitive automobile indu $50 and that variable costs are equal to $50 per finished automobile ( marginal cost Because more firms increase competition in the market, the market price falls as more fir an automobile market, or specifically, P 50+ (20/n), wheren represents the number in a market. Assume the size of the U.S. industry is 1000. Use the internal economies theory to: (a) Calculate the equilibrum number of firms in the US uithout trade? (b) What is the equilbrium price of automobiles in the United States in autarky? (c) What is the equilibrium output per firm in the US in autarky?

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter13: Between Competition And Monopoly

Section: Chapter Questions

Problem 5DQ

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Economics Question
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