Hints for Economics 452 Problem Set ThreeWork on each question as we complete that portion of chapter 9 (after practicing oncorresponding exercise) so do not put it all off until just before due. Do a rough draftfirst, then copy more neatly to version you turn in. Write your solutions neatly on aprintout of the questions and staple pages together before turning in your problem set. 1&2. See Example 9.1 Import Demand (slides 7-8) and Example 9.2 Export Supply andWorld Equilibrium (slides 16-20). 1a&2a. Remember to start by rearranging demandand supply to be in terms of quantity demanded and quantity supplied. Check that theprice intercepts of import demand and export supply match Home and Foreign’s autarkyprices (1c and 2c). As a rule of thumb, Home autarky price (1c) should turn out to behalfway between the price intercepts of Home demand and supply, and similarly forforeign’s autarky price (2c). World free trade price (2d) should turn out to be halfway inbetween Home and Foreign’s autarky prices (1c and 2c).
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