Will econia be an importer or an exporter of the good

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A. QD=10-P; QS=P for a good in the country of Econia, a closed economy. Derive and show the equilibrium price quanity; Compute the consumer surplus and the producer surplus. Show all calculations. Show the curves, including the intercepts, the equilibrium price and quanity, and the CS and PS on the diagram.

B. Suppose the previous situation is open to international trade. If the world price is $2:
1. Will Econia be an importer or an exporter of the good in discussion? Why?

2. Compute and identify the import (or export) amount on the above diagram. It will be helpful to use a horizontal line to indicate the world price.

3. Between consumers and producers in Econia, which benefits from opening Econia to trade? Use the ideas of consumer surplus and consumer surplus in your answer.

Reference no: EM13223678

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