Consider the washing machine industry in America. There are many differentiated brands in the industry and they are all

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Consider the washing machine industry in America. There are many
differentiated brands in the industry and they are all
monopolistically competitive. For all these brands, manufacturing
each additional washing machine costs $300 while setting up a
manufacturing plant costs $1 billion. New brands can enter freely
if they deem profitable and existing brands can exit the market
when they do not find it profitable to continue producing. In
total, the industry sells 32 million washing machines every
year.
When a washing machine is sold, the additional revenue that a
firm in the industry makes is P − Q/bS where P denotes the price at
which the washing machine is being sold, Q denotes the quantity, S
denotes the market size, and b denotes the sensitivity of demand
with respect to price.
D.) If increased land prices raised cost of setting up a
manufacturing plant to $4 billion, do you expect new firms to enter
the market or existing firms to exit? What would happen to firms’
profits in the short run and in the long run? Show calculations and
illustrate your answer graphically.
E.) Suppose now that US and European customers can purchase
brands from either the US or Europe. European washing machine
manufactures can produce an additional washing machine for $300 and
it costs a billion dollars to set up a manufacturing plant in
Europe. Furthermore, European customers bought 96 million washing
machines. Do you expect new firms to enter the market or existing
firms to exit? What happens to firms’ profits in the short run and
in the long run? Show calculations and illustrate your answer
graphically.
F.) After opening up to trade, are customers in US and Europe
better off? Explain.