Let us consider the Brander and Krugman (1983) model with imperfect competition. In country H, in a given sector with homogeneous final output, there are two firms: one is domestic and the other is foreign. The marginal cost for production in country H of the domestic firm is c, while the marginal cost for production of the foreign firm is c/τ, where the parameter τ < 1 represents freeness of trade, which is inversely related to the level of trade barriers (transport costs, tariffs, etc.). Let us also recall that, when the domestic firm has market power, the profit maximizing price is p, being equal top = σc/(σ - s)where σ is the market demand elasticity, and s is the market share of the domestic firm in country H.i)       When there is autarchy there are no competitors for the domestic firm in market H. What is the autarchy price, pA, that she charges in this case?

Which condition does not have to hold in a trade equilibrium of a Ricardian modelGroup of answer choicesExport from one country is equal to import to anotherCosts of imported goods are equal to costs of exported goods for both countriesReal wages are equalized in two countriesWorld price lies between autarky prices in both countries

Another function of the tariff is to protect domestic producers from foreign competition

Compared to the case of perfect competition, an import tariff against a foreign monopolist A. leads to higher domestic welfare B. leads to lower domestic welfare C. might lead to higher or lower domestic welfare D. has no impact on domestic welfare

In the Ricardian model, if a country's trade is restricted, this will cause all except which?A) limited specialization and the division of laborB) reduced volume of trade and reduced gains from tradeC) nations to produce inside their production possibilities curvesD) a country to produce some of the product of its comparative disadvantageE) raised costs as more diverse product is produced internally

A product is produced in a monopolistically competitive industry with scale economies. If thisindustry exists in two countries, and these two countries engage in trade with each other, then wewould expectA) the country with a relative abundance of the factor of production in which production of theproduct is intensive will export this product.B) the countries will trade only with other nations they are not in competition with.C) the country in which the price of the product is lower will export the product.D) neither country will export this product since there is no comparative advantage.E) each country will export different varieties of the product to the other.