Flax

Three countries engage in the production of flax (an agricultural product). The market for flax in each country is perfectly competitive. Producers within a country are identical, but they differ across countries. Each producer has a constant marginal cost up to a particular level of capacity. Throughout this analysis, let's assume that there is no transportation cost between the countries.

The following table summarizes supply and demand information across these countries (where quantities are in units per year and prices are in dollars per unit):

Country	Marginal cost	Total flax capacity of country	Market demand curve
Country 1	$250/unit	500 units	D(P) = 1400 - P
Country 2	$300/unit	500 units	D(P) = 1200 - P
Country 3	$200/unit	1200 units	D(P) = 800 - P

a. Suppose all three countries engage in free-trade. With free-trade the price of flax will be the same in all the countries. What is the short-run market equilibrium price and quantity of flax consumed in each country if all three countries can engage in free trade with each other? What is the consumer and producer surplus in each country?

(Remember: use only whole numbers, and do not use any other characters or spaces.)

1. Price with free trade?

2. Quantity of flax consumed in country 1 with free trade?

3. Quantity of flax consumed in country 2 with free trade?

4. Quantity of flax consumed in country 3 with free trade?

5. Consumer surplus in country 1 with free trade?

6. Producer surplus in country 1 with free trade?

7. Consumer surplus in country 2 with free trade?

8. Producer surplus in country 2 with free trade?

9. Consumer surplus in country 3 with free trade?

10. Producer surplus in country 3 with free trade?