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Homework answers / question archive / 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 Home is q=30−Pq=30−P and the supply of cars in Home is q=Pq=P

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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.

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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.

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