Starting from the long-run equilibrium without trade in the monopolistic competition model, consider what happens when the Home country begins trading with two other identical (in terms of the size, preferences, and technology) countries.

a. What happens to the number of Home's firms and to the number of porducts available to Home's consumers in the short tun? In the long run?

Explain

b. Why do firms lower prices in the short run relative to no-trade equilibrium? Explain.

c. Who benefits (firms, consumers, or both) from opening up to trade in the long-run? Explain.