The global market for household dishwashers is monopolistically competitive. It is initially in a free-trade equilibrium, with 40 models offered, and a price of $600 for a typical dishwasher. In your answer use a graph like that shown in Figure 6.5. There is now a permanent increase in global demand for dishwashers generally, so the global market size increases by about 15 percent. Show graphically the effect on the number of dishwasher models offered, after the global market has adjusted to a new long-run equilibrium. Explain the process of adjustment to this new long-run equilibrium.

Data From Figure 6.5

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FIGURE 6.5 Markets for Compact Cars, No Trade and Free Trade A. No trade, national markets Price and cost per car (thousands of dollars) Price and cost per car (thousands of dollars) 19 United Rest of States world UC NUS= UCNf= Unit cost Unit cost B 18.5 P = Price P = Price 10 Number of models B. Free-trade equilibrium for the world Price and cost per car (thousands of dollars) 17 E UCW = Unit cost P = Price 12 Number of models 18 Number of models