iety and increasing returns to scale in production can lead to international trade 2. Consider an industry populated by N firms, each producing a unique variety and facing the following demand curve: q = S/N 0.1S(p p), where q is the sales of a typical firm, S is the total sales of the industry, p is the price charged by the firm itself, and p is the average price of other firms. Each firm's cost function is given by C(q) = 5, 000 25q. Suppose that market size S is 200,000. a. How many firms does this industry have in equilibrium