2. Suppose cheap mountain bikes are made in both the US and the Philippines. The supply and demand for each market are given by: Philippines Qd = 100 – 0.5P Qs = P – 20 US Qd = 9110 – P Qs = 100P – 2000 Find the autarky equilibrium price and quantity sold in each country. b. а. Now suppose the two countries engage in international trade with each other. Find the combined supply and demand equations. c. Now find the trade price and quantity (world total quantity and imports/exports). Comment on the trade price and the relative size of the two markets. d. In general, which country will gain relatively more by engaging in international trade. Explain briefly.

2. Suppose cheap mountain bikes are made in both the US and the Philippines. The supply and demand for each market are given by: Philippines Qd = 100 – 0.5P Qs = P – 20 US Qd = 9110 – P Qs = 100P – 2000 Find the autarky equilibrium price and quantity sold in each country. b. а. Now suppose the two countries engage in international trade with each other. Find the combined supply and demand equations. c. Now find the trade price and quantity (world total quantity and imports/exports). Comment on the trade price and the relative size of the two markets. d. In general, which country will gain relatively more by engaging in international trade. Explain briefly.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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