Two countries are going to integrate economies. Country A has a market of 900,000 automobiles while Country B has a market of 1,600,000 automobiles. The number of firms in country A is 8 while in country B is 6 . Firms behave as monopolistic competitive firms.

What is the initial output per firm in each country before integration.?

If after trade only a total of 10 firms remains in the two countries find the final output per firm.?

c) According to the theory will the price of the automobile increase or decrease?

d) In the long run what happens to the price and the average costs. Are there profits?