Question
consider a model with two countries home and foreign and two goods Z and Y. the demand curve for each good in each country is
consider a model with two countries home and foreign and two goods Z and Y. the demand curve for each good in each country is given by:
D=60-P
The supply curve for Y in home and for Z in foreign is given by:
S=P
while the supply curve for Z home and Y foreign is given by:
S=3P
SHOWING WORKINGS ANSWER THE FOLLOWING...
what is the auturky price of good Y in home and foreign??
(ans is 30 and 15 respectively)
what is the free trade price of good Y?
(ans is 20)
Assume that a specific tariff of $12 is imposed on good Z imports. What is the export price of good Z(the price received by exporters net of tariff)?
(ans is 16)
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