ARE 138 Hw 1

ARE 138 Hw 1 - Jeff Phang (992268154) January 22, 2009 ARE...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Jeff Phang (992268154) January 22, 2009 ARE 138 HW #1 #1. a) Home Market: Dus = 24,000 – 2000Pus Sus = -12,000 + 3000Pus P max: Dus = 0 = 24,000 – 2000Pus P max = 12 P min: Sus = 0 = -12,000 + 3000Pus P min = 4 P*: Sus = Dus -12,000 + 3000Pus = 24,000 – 2000Pus 5000Pus = 36,000 Pus* = 7.2 Q* = 24,000 – 2000(7.2) = 9600 CS = [(Pmax – P*) X Q*] / 2 CS = [(12-7.2) X (9600)] / 2 = 23,040
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
PS = [(P* - Pmin) X Q*] / 2 PS = [(7.2 – 4) X (9600)] / 2 = 15,360 Foreign Market: Df = 60,000 – 10,000 Pf Sf = -15,000 + 5000 Pf Pmax: Df = 0 = 60,000 – 10,000 Pf P max = 6 Pmin: Sf = 0 = -15,000 + 5000 Pf Pmin = 3 P* Sf = Df -15,000 + 5000 Pf = 60,000 – 10,000 Pf 15,000 Pf = 75,000 P* = 5 Q* = 60,000 – 10,000 (5) = 10,000 CS = [(6-5) X 10000)] / 2 = 5,000 PS = [(5 – 3) X 10000] / 2 = 10,000 b) If trade is opened, the Foreign country will export because they have a lower equilibrium price. The range of Pw will be between the US minimum price of 4 and the Foreign maximum price of 6. ??????????????????????????????????????????????? Sx = Sf – Df
Background image of page 2
[-15,000 + 5000 Pf] - [60,000 – 10,000 Pf} = -75,000 + 15,000 P = Sx Dm = Dus - Sus [24,000 – 2000Pus] - [-12,000 + 3000Pus] = 36,000-5000 P = Dm Sx = Dm -75,000 + 15,000 P =36,000-5000 P
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 6

ARE 138 Hw 1 - Jeff Phang (992268154) January 22, 2009 ARE...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online