1. The demand function for a set of tires in nation A is Q=600-P while the supply functions is Q=-100+P. In nation B, the demand function is Q=1200-P and the supply function is Q=-200+P. The nations are initially in a state of autarky. a. Graph the demand and supply function for each nation. b. Determine the equilibrium price and quantity for tires in each nation. Suppose the world price for a set of tires is $500 and the two nations begin to trade: C. Determine the quantity imported or exported in each nation. d. Determine the consumer surplus in each nation before and after trade. Determine the producer surplus in each nation before and after trade. e. f. Determine the net gain or loss from trade in each nation.

1. The demand function for a set of tires in nation A is Q=600-P while the supply functions is Q=-100+P. In nation B, the demand function is Q=1200-P and the supply function is Q=-200+P. The nations are initially in a state of autarky. a. Graph the demand and supply function for each nation. b. Determine the equilibrium price and quantity for tires in each nation. Suppose the world price for a set of tires is $500 and the two nations begin to trade: C. Determine the quantity imported or exported in each nation. d. Determine the consumer surplus in each nation before and after trade. Determine the producer surplus in each nation before and after trade. e. f. Determine the net gain or loss from trade in each nation.

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter4: Markets In Action

Section: Chapter Questions

Problem 10SQ

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