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Imagine that automobiles are produced by a monopolistically competitive industry. The demand curve facing any given producer of automobiles is described by the equation q = S*(1 - b*(p - pind)) with b =1/40,000 and where q is the number of automobiles sold per firm, S the total sales of the industry, n the number of firms, p the price that a firm charges, and pind the average price of the other firms. We also assume that the cost function for producing automobiles is described by the equation C = F + c*q, where C is total cost, F is a fixed cost equal to 800, 000,000 and c a marginal cost equal to 6,000 . Now suppose there are two countries, Spain and the Rest of Europe. Spain has annual sales of 1,620,000 automobiles; the Rest of Europe has annual sales of 4,500, 000 automobiles. Calculate prices, average costs, and number of firms and level of production of each firm for the two countries in the absence of trade. Now suppose the two countries trade, which creates an integrated market for automobiles. Calculate the same variables than in autarky (i.e. without trade). Interpret results. Important information: from the firm maximization condition we obtain p = + g/(S*b)