Home Monopoly’s Free-Trade Equilibrium Under free trade at the fixed world price P^W, Home faces Foreign export supply of X* at that price. Because the Home firm cannot raise its price above P^W without losing all its customers to imports, X* is now also the demand curve faced by the Home monopolist. Because the price is fixed, the marginal revenue MR* is the same as the demand curve. Profits are maximized at point B, where marginal revenue equals marginal costs. The Home firm supplies S₁, and Home consumers demand D₁. The difference between these is imports, M₁ = D₁ − S₁. Because the Home monopoly now sets its price at marginal cost, the same free-trade equilibrium holds under perfect competition.