question archive Country I has the usual demand and supply curves for Murky Way candy bars
Country I has the usual demand and supply curves for Murky Way candy bars
Subject:EconomicsPrice: Bought3
Country I has the usual demand and supply curves for Murky Way candy bars. Country II
has a typical demand curve, too, but it cannot produce Murky Way candy bars.
a. Use supply and demand curves for the domestic markets and for the international
market. Show in a set of graphs the free-trade equilibrium for Murky Way candy
bars. Indicate the equilibrium world price. How does this world price compare to
the no-trade price in Country I? Indicate how many Murky Ways are traded during
each time period with free international trade.
b. Show graphically and explain the effects of the shift from no trade to free trade on
surpluses in each country. Indicate the net national gain or loss from free trade for
each country.
