Question: Let Q = S[n - 3(P - AP)] be the demand for a firm product in a monopolistic competition market, where P is the firm's
Let Q = S[n - 3(P - AP)] be the demand for a firm product in a monopolistic competition market, where P is the firm's price, AP is average price in the industry and n is the number of firms in the industry. Suppose S = 9375 is Home market size; S = 27000 is Foreign market size. Suppose firms are symmetric in each country. Home's firms have a total cost C = 5 + Q and Foreign's firms have a total cost C = 10 + 2Q. The equilibrium number of firms at Home under autarchy is
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