Answered: a) Show what happens to FOREIGN's ED-ES…

a) Show what happens to FOREIGN's ED-ES curve. Explain b) What happens to free-trade prices, equilibrium output, consumption, and imports/exports in each country. Show in a diagram and explain.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

ChapterA: The Use Of Mathematics In Principles Of Economics

Section: Chapter Questions

Problem 3RQ: Exercise A3 What dome slices of a pie chart represent?

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Question

Suppose FOREIGN's production supply curve rises (eg shifts right/down)

a) Show what happens to FOREIGN's ED-ES curve. Explain

b) What happens to free-trade prices, equilibrium output, consumption, and imports/exports in each country. Show in a diagram and explain.

c) Does HOME surplus rise? Show and explain. EG identify what happens to consumer and producer surpluses in Home. Relate to Terms Of Trade.

d) Does FOREIGN surplus rise? Show and explain. EG identify what happens to consumer and producer surpluses in Foreign. Relate to the Terms Of Trade.

Defintion Defintion Curve that represents the graphical relationship between the total supply of goods and services and the price level in the economy. When the price level increases, producers tend to supply more of a product in the market to earn a higher revenue or vice versa.

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