Sweden Norway

Quality DemandPriceQuantity SuppliedQuality DemandPriceQuality Demand Price Quantity Supplied

1,200 $--1,800 $--

1,000 $5.00 200 1,600 $5.00 -

800 $10.00 400 1,400 $10.00 -

600 $15.00 600 1,200 $15.00 -

400 $20.00 800 1,000 $20.00 200

200 $25.00 1,000 800 $25.00 400

-$30.00 1,200 600 $30.00 600

-$35.00 1,400 400 $35.00 800

-$40.00 1,600 200 $40.00 1,000

-$45.00 1,800 -$45.00 1,200

A. In the absence of trade, what are the equilibrium price and quantity of claculators produced in Sweden and Norway? Which country has the comparive advantage in calculators? In the absents of trade the equilibrimum price for Sweden is $15, quantity produced is 600. Equilibrimum price for Norway is $30, quantity produced is 600. Sweden has a comparitive advantage in producing calculators.

B. Assume there are no transportation costs. With trade, what price bring about balance in exports and imoorts? How many calculators are traded at this price? How many calculators are produced adn consumed in each country with trade?

C. Suppose the cost of transporting each calculator from sweden to Norway is $5. With trade, what is the impact of the transportation cost on the price of calculators in Sweden and Norway? How many calculators with each country produce, cunsume, and trade?