The demand for cars in Home is q=30−Pq=30−P and the supply of cars in Home is q=Pq=P

Finance Dec 19, 2020

The demand for cars in Home is q=30−Pq=30−P and the supply of cars in Home is q=Pq=P. The demand for cars in Foreign is q=10−Pq=10−P and the supply of cars in Foreign is q=Pq=P. Calculate the autarky equilibrium price and quantity in each country.

Expert Solution

In autarky, each country's demand for cars equals its own supply of cars in equilibrium.

For home country, the equilibrium condition is 30 - p = p, which gives p = 15, q = 15.
For foreign country, the equilibrium condition is 10 - p = p, which gives p = 5, q = 5.

Archived Solution

Unlocked Solution

You have full access to this solution. To save a copy with all formatting and attachments, use the button below.

Already a member? Sign In

Important Note: This solution is from our archive and has been purchased by others. Submitting it as-is may trigger plagiarism detection. Use it for reference only.

For ready-to-submit work, please order a fresh solution below.

Or get 100% fresh solution

Get Custom Quote