A semiconductor is a key component in your laptop, cell phone, and iPod. The table provides information about the market for semiconductors in the United States. Producers of semiconductors can get $18 a unit on the world market.

Price Quantity Quantity supplied

(dollars per unit) demanded

(Billions of units per year)

10 25 0

12 20 20

14 15 40

16 10 60

18 5 80

20 0 100

(a)With no international trade, what would be the price of a semiconductor and how many semiconductors a year would be bought and sold in the United States?

(b) Does the United States have a comparative advantage in producing semiconductors?

(c)Draw a graph to illustrate the U.S. supply and demand market for semiconductors. What is the price with free international trade? What is the quantity of semiconductors produced in U.S. and total quantity bought by U.S. people and the quantity exported from other countries?

(d)Due to loss of competitiveness brought on by appreciation of the exchange rate and the high production costs, U.S. government reduce the export (or limit the supply of domestic producers) by imposing an export quota of 20 billion units per year. What happens to U.S. price of semiconductors, the quantity of semiconductors bought by U.S. people, and the quantity of semiconductors exported? [hint: use equation to calculate the equilibrium].