Mythica is an economy that used to operate under a military dictatorship but has recently reformed and encouraged 'free market capitalism' and free trade between itself and the rest of the world. Assume that the global market for product X is currently perfectly competitive, with a global price of R100. A firm starts up in Mhythica selling product X, and , so far, it is the only supplier. it currently sells product X for R150.

1) using diagrams, explain what is likely to happen to the market for product X in Mythica, assuming free trade

2) comment on prices, output and profits for firms in Mythica over the next 5 years