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Country 1 and country 2 lie on either side of Mount Impassable- a barrier which separates from them from each other completely. In country 1,
Country 1 and country 2 lie on either side of Mount Impassable- a barrier which separates from them from each other completely. In country 1, the demand and supply for widgets is as follows D1 : P1 = 120 - Q1 S1 : P1 = 2Q1 As long as country 1 and country 2 are separate, the above leads to P1 = 80 and Q1 = 40 a) Express D1 in the form of Q1 as a function of P1 (that is, rearrange the given D1 in a form where Q1 is the one and only left hand side variable) b) Express S1 in the form of Q1 as a function of P1 In country 2, the demand and supply for widgets is as follows D2 : P2 = 120 - 1.5Q2 S2 : P2 = 0.5Q2 As long as country 1 and country 2 are separate, the above leads to P2 = 30 and Q2 = 60 c) Express D2 in the form of Q2 as a function of P2 d) Express S2 in the form of Q2 as a function of P2 Country 1 constructs a tunnel through Mount Impassable. The tunnel allows free and unrestricted exchange of
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