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Helpman, Melitz, and Yeaple Consider a world with the two countries H and F. Use the notation from the lecture notes to answer the questions below. 9. Use the equations of the model and the appropriate diagram to explain which H firms choose to open a foreign affiliate in F. Suppose that that the two countries had been involved in a trade war. After an international agreement, both countries choose to lower their tariffs. To answer this question, ignore the effect of changes in competition on demand levels facing firms. 10. Show in the relevant diagram how the tariff reduction affects the number of firms that export and own an affiliate (extensive margins) and the sales per firm of each type (intensive margins). Make clear why the curves are moving the way that they did. Helpman, Melitz, and Yeaple Consider a world with the two countries H and F. Use the notation from the lecture notes to answer the questions below. 9. Use the equations of the model and the appropriate diagram to explain which H firms choose to open a foreign affiliate in F. Suppose that that the two countries had been involved in a trade war. After an international agreement, both countries choose to lower their tariffs. To answer this question, ignore the effect of changes in competition on demand levels facing firms. 10. Show in the relevant diagram how the tariff reduction affects the number of firms that export and own an affiliate (extensive margins) and the sales per firm of each type (intensive margins). Make clear why the curves are moving the way that they did

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