Question

A. what is the equilibrium price of cds before trade? b. what is the equilibrium quantity of cds before trade? c. what is the price of cds after trade is allowed? d. what is the quantity of cds exported after trade is allowed? e. what is the amount of consumer surplus before trade? f. what is the amount of consumer surplus after trade? g. what is the amount of producer surplus before trade? h. what is the amount of producer surplus after trade? i. what is the amount of total surplus before trade? j. what is the amount of total surplus after trade? k. what is the change in total surplus because of trade?

Answer 1

In a world without trade, the equilibrium price and quantity in each country would be determined by their respective supply and demand curves. If trade is allowed to occur, the equilibrium price and quantity in each country will be determined by the new global supply and demand curves. To sketch the supply and demand diagrams for each country before trade, you will need to know the supply and demand curves for each country.

Step-by-step explanation:

a. In a world without trade, the equilibrium price and quantity in each country would be determined by their respective supply and demand curves. The equilibrium price is the price at which the quantity demanded equals the quantity supplied. The equilibrium quantity is the quantity at which the quantity demanded equals the quantity supplied. This can be determined by finding the point where the supply and demand curves intersect.

b. If trade is allowed to occur, the equilibrium price and quantity in each country will be determined by the new global supply and demand curves. The global equilibrium price will be the price at which the quantity demanded globally equals the quantity supplied globally. The global equilibrium quantity will be the quantity at which the quantity demanded globally equals the quantity supplied globally.

c. To sketch the supply and demand diagrams for each country before trade, you will need to know the supply and demand curves for each country. The supply curve represents the relationship between the price of a good and the quantity supplied by producers. The demand curve represents the relationship between the price of a good and the quantity demanded by consumers. By plotting these curves on a graph, you can determine the equilibrium price and quantity before trade.

d. On the supply and demand diagrams, the equilibrium price is represented by the point where the supply and demand curves intersect. The level of exports and imports in the world after trade can be shown by the difference between the quantity supplied and the quantity demanded at the global equilibrium price.