(a) Boreland and Pipeland are two countries producing toycars, having the following demand and supply conditions : Boreland: DD: Q_(d)=10-2P SS:Q_(5)=2+2P Pipeland: DD: Q_(d)=8-2P SS: Q_(5)=4+2P (i) Given this information, what will be the world equilibrium price and quantity traded? (ii) The fixed cost of setting up a production chain of toycars by the exporting country in the importing country is $2.5, and the cost of transportation is $0.25 per toycar exported. Which route would be preferred by the exporting country: producing toycars abroad or exporting the same from home? (iii) In the light of the above answers, explain the tradeoff faced by the exporting country. PLease answer all three (i),(ii)and(iii)
(a) Boreland and Pipeland are two countries producing toycars, having the following demand and supply conditions : Boreland: DD: Q_(d)=10-2P SS:Q_(5)=2+2P Pipeland: DD: Q_(d)=8-2P SS: Q_(5)=4+2P (i) Given this information, what will be the world equilibrium price and quantity traded? (ii) The fixed cost of setting up a production chain of toycars by the exporting country in the importing country is $2.5, and the cost of transportation is $0.25 per toycar exported. Which route would be preferred by the exporting country: producing toycars abroad or exporting the same from home? (iii) In the light of the above answers, explain the tradeoff faced by the exporting country. PLease answer all three (i),(ii)and(iii)
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter14: Environmental Economics
Section: Chapter Questions
Problem 14SQP
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(a) Boreland and Pipeland are two countries producing toycars, having the following demand and supply conditions : Boreland: DD: Q_(d)=10-2P SS:Q_(5)=2+2P Pipeland: DD: Q_(d)=8-2P SS: Q_(5)=4+2P (i) Given this information, what will be the world equilibrium price and quantity traded? (ii) The fixed cost of setting up a production chain of toycars by the exporting country in the importing country is $2.5, and the cost of transportation is $0.25 per toycar exported. Which route would be preferred by the exporting country: producing toycars abroad or exporting the same from home? (iii) In the light of the above answers, explain the tradeoff faced by the exporting country. PLease answer all three (i),(ii)and(iii)
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