The Same Monopolistic Competitor in an Automobile Market After Opening Trade
(Figure 5.3)

This figure begins where we left off in Figure 5.2. The initial equilibrium before trade opens is at point A. Once trade opens, the firm faces a large world market, with more competitors offering more different models. Therefore, the demand curve the firm faces after trade opens is more elastic than before trade. Press "Show D2" to show the flatter demand curve the firm faces after trade opens. As a result of the change in demand, there is a new marginal revenue curve. Press "Show MR2" to show the post-trade marginal revenue curve in the graph.
Press "Continue" when you are ready to move on. The "Reset" button will clear the graph.