Final answer:
Approximately 105 firms would be in the integrated market of Denmark and Finland if they start trading swimming goggles with each other.
Step-by-step explanation:
To calculate the number of firms in the integrated market of Denmark and Finland, we need to first determine the size of the market (S) in terms of the number of swimming goggles sold per year. The question states that in Denmark, 5000 swimming goggles are sold per year, and in Finland, 6000 swimming goggles are sold per year. So, the total market size (S) would be 5000 + 6000 = 11,000.
Next, we can use the equation Q = S/n to calculate the market share (Q) of each firm in the integrated market. Since we know that the firms in Denmark and Finland are symmetric, we can assume that the market share is the same for all firms. Therefore, the market share (Q) would be 11000/n.
To find the number of firms (n) in the integrated market, we can rearrange the equation Q = S/n to solve for n. Therefore, n = S/Q, where S is the market size (11000) and Q is the market share (11000/n). Substituting these values into the equation, n = 11000 / (11000/n). Simplifying this equation gives us n² = 11000. Taking the square root of both sides, we find that n ≈ 104.84. Since the number of firms must be a whole number, there would be approximately 105 firms in the integrated market of Denmark and Finland if they started trading swimming goggles with each other.
completed question:
Denmark and Finland produce swimming goggles. In Denmark, 2 firms produce swimming goggles, and in Finland, there are 3 firms. In Denmark, 5000 swimming goggles are sold per year, while in Finland, 6000 swimming goggles are sold per year. For all the firms, the price is given by the equation P=100+20/n, where n is the number of firms in the market the firm is in, and the average cost is given by the equation AC = 9000/Q + 100. We also know that all the firms are symmetric and therefore all have the same market share: Q=S/n, where S is the size of the market (i.e. the number of swimming goggles sold per year). Use this information to calculate how many firms there will be in the integrated market consisting of Denmark and Finland if they start trading swimming goggles with each other (see calculations).