3. Figure 4 represents the domestic markets for two different nations. Use this information to answer parts A-E. A. Draw the import demand and export supply curves that would govern trade between the two nations. You can use Figure 5 for your drawing. B. If these nations trade, at what price will they import and export? How much do they produce and consume? C. Calculate the value of the additional gains from trade that are created when these two economies begin to trade with each other. 12.5 D. Suppose trade between these nations incurs a $1/ unit transportation cost. How does this Fchange the price, amount consumed or produced, and the amount imported or exported? E. Compared to part C, how do the additional gains from trade change when a transportation cost is added to this problem? Figure 4: Large Market Economies 5 3. Figure 4 represents the domestic markets for two different nations. Use this information to answer parts A-E. A. Draw the import demand and export supply curves that would govern trade between the two nations. You can use Figure 5 for your drawing. B. If these nations trade, at what price will they import and export? How much do they produce and consume? C. Calculate the value of the additional gains from trade that are created when these two economies begin to trade with each other. 12.5 D. Suppose trade between these nations incurs a $1/ unit transportation cost. How does this Fchange the price, amount consumed or produced, and the amount imported or exported? E. Compared to part C, how do the additional gains from trade change when a transportation cost is added to this problem? Figure 4: Large Market Economies 5