Suppose we divide the world into 2 regions, A and B, and that: Region A's demand curve for microwaves is given by: DA = 1,800 - 20P. Its supply curve is: SA = 25P Region B's demand curve for microwaves is given by: DB. %3D = 1,375 - 40P. Its supply curve is: SB = 15P (a) Under no trade, what will be the equilibrium price and quantity is each region? (b) Under no trade, what will be the consumer surplus and producer surplus in each region? (c) When trade occurs, which region will export microwaves? Explain briefly. (d) Under free trade and zero transportation cost, what would be the world price of microwaves? (e) Under free trade, how many microwaves will be exported/imported? Under free trade, what will be the consumer surplus and producer surplus in each region?
Suppose we divide the world into 2 regions, A and B, and that: Region A's demand curve for microwaves is given by: DA = 1,800 - 20P. Its supply curve is: SA = 25P Region B's demand curve for microwaves is given by: DB. %3D = 1,375 - 40P. Its supply curve is: SB = 15P (a) Under no trade, what will be the equilibrium price and quantity is each region? (b) Under no trade, what will be the consumer surplus and producer surplus in each region? (c) When trade occurs, which region will export microwaves? Explain briefly. (d) Under free trade and zero transportation cost, what would be the world price of microwaves? (e) Under free trade, how many microwaves will be exported/imported? Under free trade, what will be the consumer surplus and producer surplus in each region?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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