A semiconductor is a key component in your laptop, cell phone, and iPod. The table provides information about the market for semiconductors in the United States. Producers of semiconductors can get $18 a unit on the world market. a. With no international trade, what would be the price of a semiconductor and how many semiconductors a year would be bought and sold in the United States? b. Does the United States have a comparative advantage in producing semiconductors? c. Draw a graph (graph is for your own reference, not required to be attached in the answer sheet) to illustrate the U.S. supply and demand market for semiconductors. What is the price with free international trade? What is the quantity of semiconductors produced in U.S. and total quantity bought by U.S. people and the quantity exported from other countries?

A semiconductor is a key component in your laptop, cell phone, and iPod. The table provides
information about the market for semiconductors in the United States. Producers of
semiconductors can get $18 a unit on the world market.

a. With no international trade, what would be the price of a semiconductor and how many
semiconductors a year would be bought and sold in the United States?

b. Does the United States have a comparative advantage in producing semiconductors?

c. Draw a graph (graph is for your own reference, not required to be attached in the answer
sheet) to illustrate the U.S. supply and demand market for semiconductors. What is the price
with free international trade? What is the quantity of semiconductors produced in U.S. and
total quantity bought by U.S. people and the quantity exported from other countries?

d. Due to loss of competitiveness brought on by appreciation of the exchange rate and the high
production costs, U.S. government reduce the export (or limit the supply of domestic
producers) by imposing an export quota of 20 billion units per year. What happens to U.S.
price of semiconductors, the quantity of semiconductors bought by U.S. people, and the
quantity of semiconductors exported? [hint: use equation to calculate the equilibrium]