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3. Suppose that a small country that has a local demand and supply for chocolates represented by the following equations: Qa-10-0.6P Qs = -4+0.8P Assume that the people of this country realize that their neighboring country sells boxes of chocolates at a world price of $6 per box. NOTE: DO NOT round up to whole numbers if your answers have decimals. Leave two decimals. a) Provide a graph for the chocolate market for the small country. Calculate the local price of the boxes of chocolates before trade and determine if this country will import or export chocolate. Explain. b) Based on your answer in (a), if this country decides to import chocolates, what is the domestic quantity supplied, demanded, and imported? Calculate and place your answers on the graph. c) Calculate the consumer surplus, producer surplus, and total surplus before and after trade. Who would be considered a winner if the countries traded? d) Calculate the surplus transferred from the losers to the winners, overall gains from trade, and the foreign producers' revenue after trade.

3. Suppose that a small country that has a local demand and supply for chocolates represented by the following equations: Qa-10-0.6P Qs = -4+0.8P Assume that the people of this country realize that their neighboring country sells boxes of chocolates at a world price of $6 per box. NOTE: DO NOT round up to whole numbers if your answers have decimals. Leave two decimals. a) Provide a graph for the chocolate market for the small country. Calculate the local price of the boxes of chocolates before trade and determine if this country will import or export chocolate. Explain. b) Based on your answer in (a), if this country decides to import chocolates, what is the domestic quantity supplied, demanded, and imported? Calculate and place your answers on the graph. c) Calculate the consumer surplus, producer surplus, and total surplus before and after trade. Who would be considered a winner if the countries traded? d) Calculate the surplus transferred from the losers to the winners, overall gains from trade, and the foreign producers' revenue after trade.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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3. Suppose that a small country that has a local demand and supply for chocolates represented by the following equations: Qa-10-0.6P Qs = -4+0.8P Assume that the people of this country realize that their neighboring country sells boxes of chocolates at a world price of $6 per box. NOTE: DO NOT round up to whole numbers if your answers have decimals. Leave two decimals. a) Provide a graph for the chocolate market for the small country. Calculate the local price of the boxes of chocolates before trade and determine if this country will import or export chocolate. Explain. b) Based on your answer in (a), if this country decides to import chocolates, what is the domestic quantity supplied, demanded, and imported? Calculate and place your answers on the graph. c) Calculate the consumer surplus, producer surplus, and total surplus before and after trade. Who would be considered a winner if the countries traded? d) Calculate the surplus transferred from the losers to the winners, overall gains from trade, and the foreign producers' revenue after trade.
Transcribed Image Text:3. Suppose that a small country that has a local demand and supply for chocolates represented by the following equations: Qa-10-0.6P Qs = -4+0.8P Assume that the people of this country realize that their neighboring country sells boxes of chocolates at a world price of $6 per box. NOTE: DO NOT round up to whole numbers if your answers have decimals. Leave two decimals. a) Provide a graph for the chocolate market for the small country. Calculate the local price of the boxes of chocolates before trade and determine if this country will import or export chocolate. Explain. b) Based on your answer in (a), if this country decides to import chocolates, what is the domestic quantity supplied, demanded, and imported? Calculate and place your answers on the graph. c) Calculate the consumer surplus, producer surplus, and total surplus before and after trade. Who would be considered a winner if the countries traded? d) Calculate the surplus transferred from the losers to the winners, overall gains from trade, and the foreign producers' revenue after trade.
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