04 Jun Question Ecn306 homework QUESTION 1 Use the equations listed below to answer questions 1-7. They are, respectively, the demand and supply equations for motor bikes in the U.S. and
Question
Ecn306 homework
QUESTION 1
Use the equations listed below to answer questions 1-7. They are, respectively, the demand and supply equations for motor bikes in the U.S. and the Rest of the World (ROW).
DEMAND SUPPLY
U.S. : P = 8 – 1/10 QD P = 4 + 1/10 QS (or, QD = 80 – 10 P and QS = -40 + 10 P)
ROW: P = 8 – 1/10 QD P = 2 + 1/10 QS (or, QD = 80 – 10 P and QS = -20 + 10 P)
What is the autarky or no trade price of motorbikes in the U.S.?
$4.50
$5.00
$5.50
$6.00
$8.00
2.5 points
QUESTION 2
What is the domestic production of motorbikes in the U.S. under autarky?
40
25
15
50
20
2.5 points
QUESTION 3
What is the autarky or “no trade” price of motorbikes in the Rest of the World?
$4.50
$5.00
$5.50
$6.00
$8.00
2.5 points
QUESTION 4
The U.S. and ROW have decided to open up to free trade. Using a little algebra, I find that the common equilibrium trading price is $5.50. At this free trade price, a quantity of ______ motorbikes are ______ by the United States.
10; exported
10; imported
40; exported
40; imported
30; imported
2.5 points
QUESTION 5
At the free trade price of $5.50, the United States produces a quantity of _____ motorbikes.
10
15
25
30
40
2.5 points
QUESTION 6
Calculate the Gains from Trade for the Rest of the World due to the move to free trade in motorbikes. Recall: the international trading price is $5.50.
$2.50
$4.00
$5.50
$5.00
$7.00
2.5 points
QUESTION 7
Use the following information to answer questions 9 – 12. The demand curve for coffee in the United States can be represented by QD = 350 – .5 P or P = 700 – 2 QD. The supply curve for coffee (produced in Hawaii) is QS = -200 + 5P or P = 40 + .2 QS. What are the autarky price and quantity of coffee in the United States?
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