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Suppose that fixed costs for a firm in the automobile indust

Paper help Economics Suppose that fixed costs for a firm in the automobile indust

Economics

Suppose that fixed costs for a firm in the automobile indust

Suppose that fixed costs for a firm in the automobile industry are $5 billion and that variable cost… Show more Suppose that fixed costs for a firm in the automobile industry are $5 billion and that variable costs are equal to $17,000 per finished automobile. Because more firms increase competition in the market, the market price falls as more firms enter an automobile market, or specifically P = 17,000 + (150/n), where n represents the number of firms in a market. Assume that the initial size of the U.S and the european automobile markets are 300 million and 533 million people. A. Calculate the equilibrium number of firms in the U.S and european automobile markets without trade B. What is the equilibrium price of automobiles in the United States and Europe if the automobile industry is closed to foreign trade? • Show less

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