(1/800)(P-V)), where S is industry output, n number of firms, P price of this firm, and V average price of competing firms. (Hint: each firm's marginal revenue function is MR = P - (800Q/S).) Note: show the key steps in your work. a. Home's market size is 4,900. Find the equilibrium in the Home market: what will be each firm's output, price, and number of firms? b. Foreign's market size is 57,600. Find the equilibrium in the Foreign market: what will be each firm's output, price, and number of firms? c. Suppose Home and Foreign integrate their laptop markets. Find the equilibrium in the integrated market: what will be each firm's output, price, and number of firms? d. Intuitively, why does market integration allow both countries to be better off?

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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The laptop industry is monopolistically competitive. Each firm's total cost function is given by TC = 80,000 + 10Q, where Q is the firm's output. Each firm's demand function is given by Q = S((1/n) -
(1/800)(P-V)), where S is industry output, n number of firms, P price of this firm, and V average price of competing firms. (Hint: each firm's marginal revenue function is MR = P - (800Q/S).)
Note: show the key steps in your work.
a. Home's market size is 4,900. Find the equilibrium in the Home market: what will be each firm's output, price, and number of firms?
b. Foreign's market size is 57,600. Find the equilibrium in the Foreign market: what will be each firm's output, price, and number of firms?
c. Suppose Home and Foreign integrate their laptop markets. Find the equilibrium in the integrated market: what will be each firm's output, price, and number of firms?
d. Intuitively, why does market integration allow both countries to be better off?
Transcribed Image Text:The laptop industry is monopolistically competitive. Each firm's total cost function is given by TC = 80,000 + 10Q, where Q is the firm's output. Each firm's demand function is given by Q = S((1/n) - (1/800)(P-V)), where S is industry output, n number of firms, P price of this firm, and V average price of competing firms. (Hint: each firm's marginal revenue function is MR = P - (800Q/S).) Note: show the key steps in your work. a. Home's market size is 4,900. Find the equilibrium in the Home market: what will be each firm's output, price, and number of firms? b. Foreign's market size is 57,600. Find the equilibrium in the Foreign market: what will be each firm's output, price, and number of firms? c. Suppose Home and Foreign integrate their laptop markets. Find the equilibrium in the integrated market: what will be each firm's output, price, and number of firms? d. Intuitively, why does market integration allow both countries to be better off?
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