Macroeconomics
Macroeconomics
5th Edition
ISBN: 9781319098759
Author: Paul Krugman, Robin Wells
Publisher: Worth Publishers
Question
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Chapter 5, Problem 6P
To determine

Concept Introduction:

Autarky Price: It is the equilibrium price at which domestic demand curve intersects domestic supply curve. It is equilibrium price without trade.

World Price: It is the equilibrium price at which export demand curve intersects import supply curve. It is equilibrium price with trade.

Domestic Demand Curve: The curve which shows how the quantity demanded by changes due to change in the price when there is no trade. It is negatively sloped curve.

Domestic Supply Curve: The curve which shows how the quantity supplied changes due to change in the price when there is no trade It is positively sloped curve.

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