What is the international equilibrium price

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Reference no: EM13978284

Prior to opening of trade shoes cost $50 per pair in U.S. and $10 per pair in China. If the price of shoes in U.S. were to fall to $20, U.S. demand of shoes would increase to 60 million pairs and supply would fall to 54 million pairs. On other hand, if price of shoes were to rise in China to $40 per pair, Chinese supply of shoes would rise to 140 million pairs and demand would fall to 130 million pairs. Using this information show the equilibrium in the international market for shoes on a graph on graph paper. What is the international equilibrium price and how many pairs of shoes are exported when there is free-trade in shoes between U.S. and China. Which country exports shoes? Calculate the gain from trade in shoes to U.S. and China.

Reference no: EM13978284

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