Suppose there are 2 countries that have the following supply and demand equations in autarky Country A Demand: Q = 80 - 4P Supply: Q = 2P - 4 Country B Demand: Q = 32 - 2P Supply: Q = 8P - 8 a) Given the information above which country would be the importer? (Enter A, B) b)What would be the Free Trade Price? c)What would be the Free Trade quantity traded? d) If the importing country imposes a tariff equal to $2 per unit, what would be the new price in the importing country?

Microeconomics: Principles & Policy
14th Edition
ISBN:9781337794992
Author:William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:William J. Baumol, Alan S. Blinder, John L. Solow
Chapter21: International Trade And Comparative Advantage
Section: Chapter Questions
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Suppose there are 2 countries that have the following supply and demand equations
in autarky
Country A
Demand: Q = 80 - 4P
Supply: Q = 2P - 4
Country B
Demand: Q = 32 - 2P
Supply: Q = 8P - 8
a) Given the information above which country would be the importer? (Enter A, B)
b)What would be the Free Trade Price?
c)What would be the Free Trade quantity traded?
d) If the importing country imposes a tariff equal to $2 per unit, what would be the
new price in the importing country?
Transcribed Image Text:Suppose there are 2 countries that have the following supply and demand equations in autarky Country A Demand: Q = 80 - 4P Supply: Q = 2P - 4 Country B Demand: Q = 32 - 2P Supply: Q = 8P - 8 a) Given the information above which country would be the importer? (Enter A, B) b)What would be the Free Trade Price? c)What would be the Free Trade quantity traded? d) If the importing country imposes a tariff equal to $2 per unit, what would be the new price in the importing country?
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