Problem

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02:25

Problem 55 Easy Difficulty

Assume two countries, Thailand (T) and Japan (J), have one good: cameras. The demand (d) and supply (s) for cameras in Thailand and Japan is described by the following functions: QdT
= 60 – P
QsT
= –5 + 1
4
P QdJ
= 80 – P
QsJ
= –10 + 1
2
P
P is the price measured in a common currency used in both countries, such as the Thai Baht.
a. Compute the equilibrium price (P) and quantities (Q) in each country without trade.
b. Now assume that free trade occurs. The free- trade price goes to 56.36 Baht. Who exports and
imports cameras and in what quantities?

Answer

a) 52 Baht, 8, 60 Baht, 20
b) The free trade price of camera is 56.36 Baht. The price of camera in $T$ is 52 Baht while price of camera in $J$ is 60 Baht, so price is more than trade price of camera in $J$ and price of camera is less than trade price of camera in $T .$ So, T will be the one who will be exporting cameras ad J will be importing them.

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Principles of Microeconomics for AP® Courses

Chapter 20

Globalization and Protectionism

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Video Transcript

all right. So for party, here is the graph of the demand curve in red and the supply curve in black 50 is some were here, which is slightly above the intersection. V. Plugging in P equals 50 in both curves and solving. For Q. We find that the consumer quantity is about 86.64 and the supplier 20 is a load hundreds and that will make the price go down the market forces for pushed a price. Duh. Now, to find equilibrium, we have to solve this nonlinear system of equations, find the intersection and doing so we find the equilibrium. Quantity is about 91.2 and the Caribbean price is 48.2. Indeed, the Caribbean prices lower than 50. So here, observation that party is correct. It agrees with that. Now we need to calculate. Okay, so the consumer surplus he's the area officiated region in red. You choose the into girl from zero toothy equilibrium quantity, which is about 91 point tours be said off. The demand occur which is 100 times e to the negative point. 08 que minus Stay Caribbean price. And this is about 2077 point six. This number represents the gain that consumers get by buying it the equilibrium price rather than the maximum price they're willing to pay now for the supplier or the producer serpents. We have to look at this area in blue, which is also given my name to girl from zero to equilibrium quantity. This time the equilibrium price comes first, minus four times square root. If the quantity plus 10 and this integral is about 1161 0.6 and this number represents the game that suppliers can't from selling it take a Libyan price rather than the minimum price, they're willing to do so.

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