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Consider a small country (unable to affect world prices) and the rest of the world. The demand curve for computers in the small country is
Consider a "small" country (unable to affect world prices) and the rest of the world. The demand curve for computers in the small country is given by D = a -mP and the supply of computers is given by S = mP - b
wherea=58 and b=5 and m=1.0 .
- Assume that the country trades freely with the rest of the world. If the world price of a computer is 47, compute (algebraically) the equilibrium quantities supplied and demanded and the amount of computers imported/exported under free trade.Show it in a graph.
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