2. Now add Foreign, which has a demand curve D* = 80 - 20P and a supply...

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2. Now add Foreign, which has a demand curve D* = 80 - 20P and a supply curve S* = 40 + 20P.

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 Finance Theory And Policy

ISBN: 9781292019550

10th Edition

Authors: Paul R. Krugman, Maurice Obstfeld, Marc J. Melitz

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Question Posted: Oct 02, 2024 07:03 AM

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2. Now add Foreign, which has a demand curve D* = 80 - 20P and a supply...

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International Finance Theory And Policy

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