Suppose Home's demand curve for books is D=50-10P and its supply curve S=10+10P a. Derive Home's...

Suppose Home's demand curve for books is D=50-10P and its supply curve S=10+10P

a. Derive Home's import demand schedule

b. What would be the price of books in the absence of trade

A Foreign country which has a demand curve D*=60-10P and a supply curve S*-20+10P

c. Derive the Foreign's export supply curve

d. Calculate the price of wheat what would prevail in Foreign in the absence of trade

Suppose now both Home and Foreign trade with each other. There is no transportation cost.

e. Determine the world price under free trade using the demand and supply functions for Home and Foreign

f. What is the volume of trade between Home and Foreign?

Expert Solution

Rahul Sunny answered 1 year ago

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