Suppose that a small, tropical country produces mangoes for domestic consumption and possibly for export. The national
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Suppose that a small, tropical country produces mangoes for domestic consumption and possibly for export. The national demand and supply curves for mangoes in this country are given by the following:
where P denotes the relative price of mangoes and M denotes the quantity of mangoes (in metric tons).
a. Illustrate these relationships geometrically.
b. What is the autarky price and quantity exchanged?
c. Suppose that the world price of mangoes is 45. Will this small country export mangoes? If so, how many tons?
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