Homework (Ch 09) The nation of Textilia does not allow imports of clothing. In its equilibrium without trade, a T-shirt costs $20, and the equilibrium quantity is 5 million T-shirts. One day, after reading Adam Smith's The Wealth of Nations while on vacation, the president decides to open the Textilian market to international trade. The market price of a T-shirt falls to the world price of $16. The number of T-shirts consumed in Textilia rises to 6 million, while the number of T-shirts produced declines to 3 million. Use the blue line (circle symbol) to graph the domestic demand for T-shirts in Textilia. Then use the orange line (square symbol) to graph the domestic supply of T-shirts in Textilia. Next, use the black point (plus symbol) to indicate the domestic equilibrium price and quantity before trade. Finally, use the grey line (star symbol) to indicate the world price. Note: Assume the domestic demand and domestic supply curves are linear. Price of T-shirts 40 36 32 28 24 20 16 12 8 4 O 10 Domestic Demand Domestic Supply Domestic Equilibrium World Price ?

Homework (Ch 09) The nation of Textilia does not allow imports of clothing. In its equilibrium without trade, a T-shirt costs $20, and the equilibrium quantity is 5 million T-shirts. One day, after reading Adam Smith's The Wealth of Nations while on vacation, the president decides to open the Textilian market to international trade. The market price of a T-shirt falls to the world price of $16. The number of T-shirts consumed in Textilia rises to 6 million, while the number of T-shirts produced declines to 3 million. Use the blue line (circle symbol) to graph the domestic demand for T-shirts in Textilia. Then use the orange line (square symbol) to graph the domestic supply of T-shirts in Textilia. Next, use the black point (plus symbol) to indicate the domestic equilibrium price and quantity before trade. Finally, use the grey line (star symbol) to indicate the world price. Note: Assume the domestic demand and domestic supply curves are linear. Price of T-shirts 40 36 32 28 24 20 16 12 8 4 O 10 Domestic Demand Domestic Supply Domestic Equilibrium World Price ?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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