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Unformatted text preview: Name___________________________ Due Date: 11/18/10 Food & Resource Economics 3103 Assignment # 4 - solutions TRADE and EXCHANGE RATES The purpose of this exercise is to familiarize yourselves with the basic concepts of trade using the export supply, ES and import demand, ID . Using the graphs that follow you are asked to answer the respective questions. Country A World Market Country B a. The domestic supply and demand situations in two countries Country A and Country B, are shown above. Accurately draw the appropriate export supply and import demand curves for the world market. Label the curves you have drawn, and identify the world price of the good if free trade is allowed. In order to do so first you need, to label your axis as well as the supply and demand curve in all graphs to identify the Importer and Exporter country to indicate the equilibrium in all graphs. b. Once trade has occurred and the new equilibrium world price has been determined, will consumers in the importing country pay a higher price or a lower price than before trade occurred ? Justify your answer....
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This note was uploaded on 02/10/2011 for the course AEB 3103 taught by Professor Cazanova during the Fall '08 term at University of Florida.
- Fall '08