Final answer:
The price of the motor parts shipped to the subsidiary would be determined by market forces and would depend on the equilibrium price and quantities in each country without trade. Assuming free trade occurs, the quantities exported and imported would depend on the comparative advantage of each country in producing the motor parts.
Step-by-step explanation:
In this scenario, the price of the motor parts shipped to the subsidiary would be determined by market forces. The equilibrium price and quantities in each country without trade would establish the baseline.
Without trade, the price and quantity of the motor parts in Thailand and Indonesia would be determined by their respective supply and demand curves. The equilibrium price (P) is the price at which the quantity demanded equals the quantity supplied. The equilibrium quantities (Q) in each country would depend on the individual supply and demand conditions.
Now, assuming free trade occurs and the free-trade price is set at 56.36 Baht, the actual quantities exported and imported would depend on which country has a comparative advantage in producing the motor parts. If Thailand has a lower production cost, it would export motor parts to Indonesia, and Indonesia would import the parts. The exact