Suppose two countries, Canada and Japan are considering making computers. Firms in each individual country are identical and symmetric in their cost structures. It costs $5 Million to set up a computer production facility and then an addition $20 to make each computer individually, in either country. The price at which each firm can sell its computers is affected by the amount of firms it must compete with, and is given by the function P P = 20 + 15 n The initial market size in Japan is $ 3 Million and in Canada is $5.33 Million.

a) Calculate the number of firms producing computers in each country in autarky.

b) Calculate the price of computers in each country in autarky.

c) If the two countries open up to trade and form one integrated market, what will be the number of firms and the price of computers in the world market?

d) Calculate the responsiveness of a firms sales to its price. [Hint: this is denoted as b in the notes]