PS01 - same graph that you drew to answer question 2) that...

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EC 340 Spring 2011 Problem Set 1 The following questions refer to the following diagram that represents the ordinary demand and supply curves for a particular country (call the country “Home” and a particular good (e.g., winter coats). 1. What is the autarky price of winter coats in Home? 2. Suppose that Home is an importer of winter coats. Draw the import demand curve. 3. Suppose that the autarky price of winter coats in the other country (call it “Foreign”) is 10 and that the equilibrium price with trade is 50. Draw the export supply curve (in the
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Unformatted text preview: same graph that you drew to answer question 2) that is consistent with this information. 4. Based on the information so far, what does trade imply for producer surplus in Home? Be specific, describing both the direction of change (if any) and its size. 5. Based on the information so far, what does trade imply for consumer surplus in Home? Be specific, describing both the direction of change (if any) and its size. 6. What is the net welfare effect of trade on Home? 7. What is the net welfare effect of trade on Foreign?...
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