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Kawin is a small country that produces and consumes jelly beans. The world price of jelly beans is $1/bag, ad Kawmin's domestic demand and supply are governed by the following equations:
Demand: Qd = 8 - P
Supply: Qs = P
where P is in dollars per bag and Q is in bags of jelly beans.
a. Draw a well-labeled graph of the situation in Kawmin if the nation does not allow trade. Calculate the following: the equilibrium price and quantity, consumer surplus, producer surplus, and total surplus.
How do you find the domestic price to answer their question?
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