Reference no: EM13742789
The Intra-Industry Trade Model
1) Explain the Krugman Imperfect Competition Model of intra-industry trade in automobiles, and what the model means. Use diagrams to demonstrate the model in autarky and in free trade, and to show the existence of gains from trade.
The two main equations of the Imperfect Competition in Trade Model for automobiles are:
Average Cost:
Price-Competition:
where F = fixed cost = $750,000,000
Q = sales of an individual firm
S = total sales of the industry ()
c = marginal cost = $ 5500
b = a parameter of the demand equation = 1 / 30,000
n = number of firms in the market
P = price per car
AC = average cost per car
2) Home Country: Given that the total market of the Home country is 900,000 units. Given the equations and parameter values above, solve for the equilibrium number of automobile companies, the number of cars each firm will produce, and the price of the cars in the Home country. Draw a diagram illustrating the model.
3) Foreign Country: Given that the total market of the Foreign country is 1,600,000 units. Given the equations and parameter values above, solve for the equilibrium number of automobile companies, the number of cars each firm will produce, and the price of the cars in the Home country. Draw a diagram illustrating the model.
4) Free Trade: Now combine the two economies together in free trade. Now what are the results? How many firms and varieties of automobiles are there available? What is the price of the cars? Draw a diagram illustrating the model. What happened in the industry in free trade? Are consumers better off? Are there any gains from trade? What are they? Why?
|
Discuss how the leadership is promoting change
: discuss how the leadership is promoting change to the field of public administration. Justify your response with one or two examples.
|
|
What technical/economi revolution started in england
: what technical/economi revolution started in England and that has had long-lasting implications?
|
|
Write an essay on the nuclear testing to global terrorism
: Write an essay on the Cold War America: From Nuclear Testing to Global Terrorism. The prosperity and freedoms of favored American citizens has always required that others be deprived.
|
|
Home country
: Home Country: Given that the total market of the Home country is 900,000 units. Given the equations and parameter values above, solve for the equilibrium number of automobile companies, the number of cars each firm will produce, and the price of the ..
|
|
The intra-industry trade model
: Explain the Krugman Imperfect Competition Model of intra-industry trade in automobiles, and what the model means. Use diagrams to demonstrate the model in autarky and in free trade, and to show the existence of gains from trade.
|
|
Describe role of protocols in network communications
: Describe the role of protocols In network communications and what command do you use to enter global configuration mode and Name three main components of any modern day network.
|
|
Ease and simplicity of our current technological devices
: What are some of the ways that the ease and simplicity of our current technological devices also lead us at times to surrogate our daily responsibilities onto these devices?
|
|
Describe the innovation life cycle proposed
: Describe the innovation life cycle proposed by Abernathy and Utterback. Does the model provide a useful tool to guide and manage the innovation process? Do you see any weak points in the model?
|
|
Market demand for long-playing records
: Over the years the market demand for “long-playing records made of polyvinyl has fallen considerably as new technologies replaced the old “lp” yet lps are still available for sale and they sell at price points higher (in some cases much higher) than ..
|