Question

Millions of pounds A. In the absence of trade, what is the equilibrium price and equilibrium quantity?

Answer 1

In a world without trade, the equilibrium price and quantity in each country would be determined by the intersection of the domestic supply and demand curves.

Step-by-step explanation:

In a world without trade, the equilibrium price and quantity in each country would be determined by the intersection of the domestic supply and demand curves. The equilibrium price is the price at which the quantity demanded equals the quantity supplied, and the equilibrium quantity is the quantity traded at that price.

For example, if the domestic supply curve in Country A intersects the domestic demand curve at a price of $10 and a quantity of 100 units, then the equilibrium price in Country A would be $10 and the equilibrium quantity would be 100 units.

This analysis can be applied to each country individually to determine the equilibrium price and quantity in the absence of trade.