assignment3 - International Trade, Economics 181 Problem...

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International Trade, Economics 181 Problem Set 3: Imperfect Competition Due Date: November 7, Beginning of Class 1. For each of the following examples, explain whether this is a case of external or internal economies of scale: (a) Most musical wind instruments in the Untied States are produced by more than a dozen factories in Elkhart, Indiana. (b) All Hondas sold in the United States are either imported or produced in Marysville, Ohio. (c) All airframes for Airbus, Europe&s, only producer of large aircraft, are assembled in Toulouse, France. (d) Hartford, Connecticut, is the insurance capital of the northeastern United States. 2. In perfect competition, firms set price equal to marginal cost. Why this possible when isn&t there are internal economies of scale? 3. Suppose the widget industry operates in the home country, such that each firm&s sales of widgets is given by: () 1 X Sb P P n =− where X is firm sales, S is total industry sales, n is the number of firms, P is the price
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This note was uploaded on 09/24/2008 for the course ECON c181 taught by Professor Harrison during the Fall '06 term at University of California, Berkeley.

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assignment3 - International Trade, Economics 181 Problem...

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