Compute the price and quantity of equilibrium in country

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Reference no: EM1361642

The demand and supply of wheat in country A are:

D=100-2P S=20+20P
and in country B they are:
D*=800-200P S*= 400+200P

- Compute the price and quantity of equilibrium in each country when both country A and country B are closed economies.

- Calculate the price, the quantity produced by each county, and the traded quantity when both countries are open to free trade and country A imports wheat from country B.

- Let us consider that country A applies a tariff of €1 on its imports of wheat. Calculate the price paid for imports in country A (country A is a small country) and the quantity produced, demanded and imported in the same country. Finally, show graphically the change in the
welfare of country A when passing from a closed economy to an open economy with a tariff.

Reference no: EM1361642

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