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Hi. I'm having a hard time finding the equilibrium. And if you could please explain how you found the equilibrium. (3) [Welfare analysis: 24 pts]
Hi. I'm having a hard time finding the equilibrium. And if you could please explain how you found the equilibrium.
(3) [Welfare analysis: 24 pts] In the graphs on the first page, draw horizontal lines at the international equilibrium price you found in (2c). Then use the graphs on the first page to answer the following questions for each country. United States Europe a. Does consumer surplus increase or decrease as a result of international trade? b. By how much? million $ million c. Does producer surplus increase or decrease as a result of international trade? d. By how much? $ million $ million e. Does total surplus (or total welfare) increase or decrease as a result of international trade? f. By how much? $ million $ millionSuppose the United States and Europe have the following demand and supply curves for wheat. $9 $9 United States Europe $8 $8 $7 $7 $6 $6 $5 $5 Price Price $4 $4 $3 $3 EX $2 $2 $1 $1 $0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 0 1 2 3 4 5 6 7 8 9 10 Quantity (millions) Quantity (millions) Demand -Supply Demand -Supply (1) [Autarky: 20 pts] First suppose that the United States and Europe do not engage in international trade. (The absence of international trade is called "autarky.") In each graph, draw a horizontal line at the equilibrium price. Then compute the following for each country. United States Europe a. Equilibrium price. $ $ b. Equilibrium quantity. million million c. Consumer surplus. S million $ million d. Producer surplus. S million $ million e. Total surplus. S million $ millionStep by Step Solution
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