Problem
a. Calculate the equilibrium number of firms in the U.S. and European automobile markets wirhout trade.
b. What is the equilibrium price of automobiles in the United States and Europe if the automobile industry is closed to foreign trade?
c. Now suppose that the United States decides on free trade in automobiles with Europe. The trade agreement with the Europeans adds 533 million consumers to the automobile market, in addition to the 300 million in the United States. How many automobile times will there be in the United States and in Europe combined? What will be the new equilibrium price of automobiles?
d. Why are prices in the United States different in (c) than in (b)? Are consumer better off with free trade? In what ways?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.