Consider a small economy with a demand for a good that is q=100-4p and a supply that is q=-10+p. The world price of this good is 20. The autarky equilibrium price and quantity are: Assume no trade. Total surplus is: Assume free trade. The new price, quantity supply and quantity demanded

Consider a small economy with a demand for a good that is q=100-4p and a supply that is q=-10+p. The world price of this good is 20. The autarky equilibrium price and quantity are: Assume no trade. Total surplus is: Assume free trade. The new price, quantity supply and quantity demanded

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Problem 1 Refreshing Refreshing Trade Basics - Prices Consider the market for computers in two countries, Uruguay and Indonesia. Let's assume both have perfectly competitive domestic computer markets. In autarky (no trade), the equilibrium price of computers in Uruguay is $500, and 10,000 computers are sold. In Indonesia (under autarky), the equilibrium price of computers is $400 and 8,000 computers are sold. (a) Draw supply and demand (partial equilibrium) graphs for each of these two countries indicating how many computers are sold and at what price when neither country trades (b) Now Uruguay and Indonesia open themselves up to global trade of com- puters. Let's assume the global price of computers is $450. Describe qual- itatively what happens to the price consumers pay for computers in each of these two countries (relative to the original autarky situation) as well as how much domestic producers sell now relative to the no trade world. Also state whether each country is an importer…
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