Question: The Amplier industry is monopolistically competitive. The cost function for pro- duction of an amplier is the same for all rms in both the Home

The Amplier industry is monopolistically competitive. The cost function for pro- duction of an amplier is the same for all rms in both the Home and Foreign country: C(q) = 400000 500q where q is the quantity of ampliers produced by a rm. The size of the market for Ampliers is the same in both the Home and Foreign country, S = S = 1000. Derive the relation between the average cost of an Amplier and the number of rms for each country in autarky (Home and Foreign) and for the world market when there is free trade. Explain how the equilibrium number of rms in the world market will be deter- mined when there is free trade. Will there be an equal number of rms in each country (Home and Foreign) when there is free trade

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