Chapter 21, Problem 57P

The country of Pepperland exports steel to the Land of Submarines. Information for the quantity demanded (Qd) and quantity supplied (Qs) in each country, in a world without trade, are given in Table 34.6 and Table 34.7.

1. What would be the equilibrium price and quantity in each country in a world without trade? How can you tell?
2. What would be the equilibrium price and quantity in each country if trade is allowed to occur? How can you tell?
3. Sketch two supply and demand diagrams, one for each country, in the situation before trade.
4. On those diagrams, show the equilibrium price and the levels of exports and imports in the world after trade.
5. If the Land of Submarines imposes an anti- dumping import quota of 30, explain in general terms whether it will benefit or injure consumers and producers in each country.
6. Does your general answer change if the Land of Submarines imposes an import quota of 70?