thanks a lot

Suppose the market for cars is characterised by monopolistic com petition. A firm 3' has a marginal cost of b,- per car produced, and a fixed cost K. Suppose that per capita demand for firm 's cars is given by 1:) Ci : , .2 Z P where w is the wage and p,- the price for firm i's variety. The labour force in Home is L and aggregate demand for 's cars in Home is y? : L0,. Firms act as price setters. a) Derive the optimal price a firm will set as a function of b,. What is the maximum marginal cost I) for a firm to have positive profits? Explain. b) Home now introduces free trade in cars with Foreign with iden tical labour force L and per capita demand Cg. Suppose that all firms in Home and Foreign have the same marginal cost b 2K. What are the effects of international trade on domestic firms now (which firms will exit, export, etc)? Compute or explain