Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

China can produce sneakers with an average cost function given by ACCHN=(1+QS)8, while the United States can produce sneakers with an average cost function given

image text in transcribed

China can produce sneakers with an average cost function given by ACCHN=(1+QS)8, while the United States can produce sneakers with an average cost function given by ACUS=(1+QS)12. The demand for sneakers in each country is the same, and is given by the function P=205QS. a) Graph (somewhat accurately) the cost curves for each country. b) Determine the price and quantity of sneakers sold in each country in autarky. (Hint: You may need to use either a graphing program or the quadratic formula) 1 c) If the two countries open to trade, determine the world price of sneakers and the quantity of sneakers produced in each country. (Hint: If autarkic demands are equal, then world demand will be twice the quantity at every given price) d) Imagine the United States was the only country producing sneakers in 2016. Then, in 2017, China develops the technology to potentially produce sneakers. If China has the ability to produce sneakers in 2017, what will be the world price of sneakers and the quantity of sneakers produced in each country in 2017? China can produce sneakers with an average cost function given by ACCHN=(1+QS)8, while the United States can produce sneakers with an average cost function given by ACUS=(1+QS)12. The demand for sneakers in each country is the same, and is given by the function P=205QS. a) Graph (somewhat accurately) the cost curves for each country. b) Determine the price and quantity of sneakers sold in each country in autarky. (Hint: You may need to use either a graphing program or the quadratic formula) 1 c) If the two countries open to trade, determine the world price of sneakers and the quantity of sneakers produced in each country. (Hint: If autarkic demands are equal, then world demand will be twice the quantity at every given price) d) Imagine the United States was the only country producing sneakers in 2016. Then, in 2017, China develops the technology to potentially produce sneakers. If China has the ability to produce sneakers in 2017, what will be the world price of sneakers and the quantity of sneakers produced in each country in 2017

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Business Accounting Uk Gaap Volume 1

Authors: Frank Wood, Alan Sangster

1st Edition

0273718762, 9780273718765

More Books

Students also viewed these Accounting questions