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The gure on the right represents the international market for widgets. Initially, there is no trade. a. What is the autarky price of a widget
The gure on the right represents the international market for widgets. Initially, there is no trade. a. What is the autarky price of a widget in the country with the higher autarky price? In the country with the lower autarky price? Now suppose the two countries open to trade and transportation costs are $9 per widget. b. What will be the price in the importing country, the price in the exporting country, and the volume of trade? c. What is the total cost of transporting the widgets between the exporting and importing countries? Give a 38 value. d. What is the net gain or loss from trade for the importing country relative to autarky? Give a 3 value. e. What is the net gain or loss from trade for the exporting country relative to autarky'? Give a 3 value. A new generation of container ships reduces transportation costs to $6 per widget. f. How much does the change in transportation costs increase or decrease world welfare?I (Give a 3 value.)
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