Part 1: Spatial Equilibrium The demand in market 1 is D1 = 24 - P1 The supply in market 1 is S1 = -2 + P1 The demand in market 2 is D2 = 16 - P2 The supply in market 2 is S2 = 2 + P2 If no trade occurs between the markets, what are the equilibrium values of D1, S1, P1, D2, S2, and P2? Solve algebraically. If the cost of transportation between the two markets is PT = 2, what would be the equilibrium values of D1, S1, P1, D2, S2, P2, QT, and PT? Solve algebraically. Show the above situation graphically, both with and without trade.Please label everything. [Insert an image of your graph here]

Given function D1=24-P1 S1=-2+P1 D2=16-P2 S2=2+P2 Cost of transportation Pt=2

Answered: The demand in market 1 is D1 = 24 - P1…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Part 1: Spatial Equilibrium

The demand in market 1 is D₁ = 24 - P₁

The supply in market 1 is S₁ = -2 + P₁

The demand in market 2 is D₂ = 16 - P₂

The supply in market 2 is S₂ = 2 + P₂

If no trade occurs between the markets, what are the equilibrium values of D₁, S_1,P_1,D₂, S₂, and P₂? Solve algebraically.

If the cost of transportation between the two markets is P_T = 2, what would be the equilibrium values of D₁, S₁,P_1,D₂, S₂, P₂, Q_T, and P_T? Solve algebraically.

Show the above situation graphically, both with and without trade.Please label everything.

[Insert an image of your graph here]

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