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s (45%) A) Home's demand curve for wheat is D= 100 - 20P Its supply curve is S= 20 + 20P (5%) What would the
s (45%) A) Home's demand curve for wheat is D= 100 - 20P Its supply curve is S= 20 + 20P (5%) What would the price of wheat be in the absence of trade? a) l b) 2 c) 3 B) Now add Foreign (*), which has a demand curve D* = 80 - 20P and a supply curve 70% S* = 40 + 20P. (5%) Find the price of wheat that would prevail in Foreign in the absence of trade? a) 0.5 b) 1.0 c) 1.5 d) 2.0 C) (10%) Now allow Foreign and Home to trade with each other, at zero transportation cost. 1) What is the world price? a) 0.5 b) 1.0 c) 1.5 d) 2.0 2) What is the volume of trade? a) 10 b) 20 c) 30 d) 40 (D) (25%)Home imposes a specific tariff of 0.5 on wheat imports (1) (10%) the price of wheat in each country; a) Home:1.75; Foreign: 1.25 b) Home:1.85; Foreign: 1.35 c) Home: 1.95; Foreign: 1.45 d) Home:2.05; Foreign: 1.55 (2) (10%) the quantity of wheat supplied and demanded in each country? a) Home: supply: 55, demand: 65; Foreign: supply: 75, demand: 65 b) Home: supply: 55, demand: 65; Foreign: supply: 65, demand: 55 c) Home: supply: 45, demand: 65; Foreign: supply: 75, demand: 55 d) Home: supply: 45, demand: 65; Foreign: supply: 85, demand: 55 (3) (5%) the volume of trade. a) 10 b) 15 c) 20 d) 25
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