Consider a situation in which two countries, Home and Foreign, can produce a good that is subject to external economies of scale. Assume that firms in both countries face the same average costs curve (AC), given by

AC = m+r/s+Q where m=3, r=20, s=2 and Q indicates quantity.

The demand curves are given by, respectively:

Home: Q= b-P

Foreign Q = b*-P

where b=20 and b*=40 .

Q indicates quantity and P indicates price

Assume that both countries are closed to international trade. Compute the equilibrium price and quantity in both countries.