Consider two identical economies, each with 2 goods and 1 factor where X is produced by a monopolist with the following cost structure,X=F+(mc_x)L_x.

a) Draw the autarky and trade equilibriums for both H and F.

b) Suppose the H country's government forces its monopolistic producer to price his good at average cost. How would that policy affect country F? Justify your answer.

c) What if in country F, instead of a monopoly, X is produced by a duopoly. How would this alter the H trade equilibrium?

d) Suppose the two countries are actually small open economies. Describe the possible trade equilibria given p*>p^Aversus p*Awhere p* is the free trade price and p^Ais the autarky price.

e) Suppose the two countries are actually small open economies. Further suppose the imperfectly competitive sector is defined by monopolistic competition such that there are 10 producers of good X in each country. Describe the likely trade equilibrium?