Assume two countries, the U.S (US) and Japan (J), have one good: cars. Thedemand (d) and supply (s) functions for cars in the U.S. and Japan are described by the following functions: 1 Qd = 30 – ,P %3D Qs = -4 + P Qdus = 40 – P QsUS = -10 + 2P Pis the price measured in a common currency used in both countries, such as the U.S. dollar. a. Compute the equilibrium price (P) and quantities (Q) in each country without trade b. Now assume that free trade occurs. The free-trade price goes to 50 U.S. dollars. Who exports and imports cars and in what quantities?

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AaBbCcDdE
AaBbCcDdEe
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Table Pam
Thomas-Winston
1. Assume two countries, the U.S (US) and Japan (J), have one good: cars. Thedemand (d)
and supply (s) functions for cars in the U.S. and Japan are described by the following
functions:
Qd = 30 – ¬P
Qs = -4 + P
Qdus = 40 – P
QSUS = -10 + 2P
Pis the price measured in a common currency used in both countries, such as the U.S.
dollar.
a. Compute the equilibrium price (P) and quantities (Q) in each country without trade
b. Now assume that free trade occurs. The free-trade price goes to 50 U.S. dollars. Who
exports and imports cars and in what quantities?
2. You have the responsibility of managing trade policy in Jamaica. The Jamaicanexport
market for coffee is new and developing, i.e., Jamaica coffee is an infant industry. Jamaica
coffee producers are requesting tariff protection from cheap Brazilian coffee. Whattypes of
policies will you enact? Explain.
Does international trade, taken as a whole, increase the total number ofjobs,decrease
the total number of jobs, or leave the total number of jobs about the same?
3.
Hint: Provide your answer (with reasoning) based on what you expect under the partial
equilibrium model for the exporting country, the importing country, and the net overall
effect on the world.
ill
Transcribed Image Text:= E v E v AaBbCcDdE AaBbCcDdEe AaBbCcDdEe AaBbCcDdEe AaBbCc Normal Body Text List Paragraph No Spacing Table Pam Thomas-Winston 1. Assume two countries, the U.S (US) and Japan (J), have one good: cars. Thedemand (d) and supply (s) functions for cars in the U.S. and Japan are described by the following functions: Qd = 30 – ¬P Qs = -4 + P Qdus = 40 – P QSUS = -10 + 2P Pis the price measured in a common currency used in both countries, such as the U.S. dollar. a. Compute the equilibrium price (P) and quantities (Q) in each country without trade b. Now assume that free trade occurs. The free-trade price goes to 50 U.S. dollars. Who exports and imports cars and in what quantities? 2. You have the responsibility of managing trade policy in Jamaica. The Jamaicanexport market for coffee is new and developing, i.e., Jamaica coffee is an infant industry. Jamaica coffee producers are requesting tariff protection from cheap Brazilian coffee. Whattypes of policies will you enact? Explain. Does international trade, taken as a whole, increase the total number ofjobs,decrease the total number of jobs, or leave the total number of jobs about the same? 3. Hint: Provide your answer (with reasoning) based on what you expect under the partial equilibrium model for the exporting country, the importing country, and the net overall effect on the world. ill
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