(a) Countries A, B and C are the only three computer- producing countries in the world....

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(a) Countries A, B and C are the only three computer- producing countries in the world. The three countries have the same production technology for every firm, and face the same demand conditions. The annual sales of the three countries are 10,00,000; 90,00,000, and 40,00,000 computers, respectively. Fixed and marginal costs of production of computers for each firm in each country are 750,000 and 5000, respectively; and the degree of responsiveness of each firm's sales to its price, vis--vis other firms is 1/30,000. Answer the following questions: (i) Calculate the equilibrium number of firms in the three countries before trade. (ii) What is the equilibrium price in these countries under autarky? (iii) Calculate the total number of firms and the equilibrium price, after the economies integrate. (iv) Discuss the gains from trade of market integration post trade. Which country gains the most from integration? (12) (a) Countries A, B and C are the only three computer- producing countries in the world. The three countries have the same production technology for every firm, and face the same demand conditions. The annual sales of the three countries are 10,00,000; 90,00,000, and 40,00,000 computers, respectively. Fixed and marginal costs of production of computers for each firm in each country are 750,000 and 5000, respectively; and the degree of responsiveness of each firm's sales to its price, vis--vis other firms is 1/30,000. Answer the following questions: (i) Calculate the equilibrium number of firms in the three countries before trade. (ii) What is the equilibrium price in these countries under autarky? (iii) Calculate the total number of firms and the equilibrium price, after the economies integrate. (iv) Discuss the gains from trade of market integration post trade. Which country gains the most from integration? (12)

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a i Equilibrium number of firms in each country before trade Country A Sales 1000000 computers Numbe... View the full answer