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c. Now consider two different firms within the wine industry:' in monopolistic competition in a country. The marginal cost of firm 1 is :1 =
c. Now consider two different firms within the wine industry:' in monopolistic competition in a country. The marginal cost of firm 1 is :1 = $65 and the marginal cost for firm 2 is c; = $30. The domestic demand facing each firm in self-sufficiencyl is Q = 100 P. Once free trade takes place, each firm will face a demand curve characterized by: C1 = 180 SP. Draw a graph of domestic demand and demand in free trade {in one graph] and explain whether both firms will operate in free trade as well as in the domestic market. [8 points)
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