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International Economics 10th Edition by Paul Krugman,Maurice Obstfeld ,Marc Melitz
Edition 10ISBN: 978-0133423648International Economics 10th Edition by Paul Krugman,Maurice Obstfeld ,Marc Melitz
Edition 10ISBN: 978-0133423648 Exercise 2
Now add Foreign, which has a demand curve
D * = 80 ? 20 P
and a supply curve
S * = 40 + 20 P.
a. Derive and graph Foreign's export supply curve and find the price of wheat that would prevail in Foreign in the absence of trade.
b. Now allow Foreign and Home to trade with each other, at zero transportation cost. Find and graph the equilibrium under free trade. What is the world price? What is the volume of trade?
D * = 80 ? 20 P
and a supply curve
S * = 40 + 20 P.
a. Derive and graph Foreign's export supply curve and find the price of wheat that would prevail in Foreign in the absence of trade.
b. Now allow Foreign and Home to trade with each other, at zero transportation cost. Find and graph the equilibrium under free trade. What is the world price? What is the volume of trade?
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International Economics 10th Edition by Paul Krugman,Maurice Obstfeld ,Marc Melitz
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