a) For country A,
Demand is P=3600-0.04Q
and supply is P=400+0.04Q
For equilibrium, demand=supply
or, 3600-0.04Q=400+0.04Q
or, 0.08Q=3200
or, Q=40,000 units
and P=400+0.04*40,000 = $2000
For country B,
Demand is P=1300-0.012Q
and supply is P=100+0.012Q
For equilibrium, demand=supply
or, 1300-0.012Q=100+0.012Q
or, 0.024Q=1200
or, Q=50,000 units
and P=100+0.012*50,000=$700
In the diagram below, we have shown a rough diagram of the situation when free trade takes place.
Country A on left side and country B on the right side.
At world price of $1000, country B gains profit from trade as it can produce 75,000 units at this price and export 75000-25000 = 50000 units, whereas country A can only produce 15,000 units at this price.
b) Here exporting country is B.
please hekp and show work! other? Explain. 2. The domestic conditions for the lead-acid batteries for country A and country B are as follows: Country A: P 3600-0.040 Country B: P 1300-0.012Q P 400...
I need help with questions 3-5. Thanks! Consider the case of an industry whose production activity creates substantial pollution in the local rivers, lakes, and groundwater. For example, it is convenient for chemical companies to dump their chemical wastes into nearby lakes and water bodies. This may not impose any cost on the firms. However, the dumping of wastes into the lakes imposes an external cost on the environment and áffects other members of the society. When the domestic firms...