Final answer:
The equilibrium price and quantity in each country without trade are where the domestic supply and demand curves intersect, resulting in market clearance with no surplus or shortage. With trade, these equilibria may shift due to changes in supply and demand influenced by access to international markets.
Step-by-step explanation:
The equilibrium price and quantity in a market system without interferences are determined by the intersection of the supply and demand curves. At this point, the quantity of goods suppliers are willing to sell equals the quantity of goods consumers are willing to buy at a certain price. When no trade occurs, each country will have its own equilibrium based on its domestic supply and demand conditions.
Without trade, each country relies solely on its own market forces to determine the equilibrium price and quantity. You can tell when the market reaches equilibrium when the market clears - meaning all of the goods offered for sale are purchased, and there is no surplus or shortage.
If trade is allowed to occur, the equilibrium price and quantity in each country may change as markets open up and domestic supply and demand curves shift due to international competition and the availability of foreign goods. The new equilibrium can be determined through the analysis of changes in supply and demand in response to trade.