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

a. Relative to the no-trade equilibrium, what is an increase in the industry demand?

b. What happens to the demand curve faced by each firm?

c. What happens to the number of Home's firms in the short-run? In the long-run? Explain.

d. What happens to the number of available products in Home in the short-run? In the long-run? Explain.

e. What happens to the prices, and output per firm in the long-run? (relative to no-trade equilibrium)