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The demand and supply for good A in Bolivia are given by: Inverse Demand: P=50−2Q

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Inverse Supply: P=10+2Q
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(a) Derive and draw the demand and supply curves for leather boots. ( 2 marks) (b) Calculate and show the autarky price of good A in Bolivia on the graph.

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Answer:

-(a) To derivestep explanation: the demand and supply curves for good A, we need to solve for Q in the inverse demand and supply functions and then plot the points on a graph.

Inverse demand: P = 50 - 2Q

Q = (50 - P) / 2

Inverse supply: P = 10 + 2Q

Q = (P - 10) / 2

Now we can plot the points on a graph where the x-axis represents the quantity (Q) and the y-axis represents the price (P).

Demand curve:

When P = 0, Q = 25

When P = 10, Q = 20

When P = 20, Q = 15

When P = 30, Q = 10

When P = 40, Q = 5

When P = 50, Q = 0

Supply curve:

When P = 0, Q = -5

When P = 10, Q = 0

When P = 20, Q = 5

When P = 30, Q = 10

When P = 40, Q = 15

When P = 50, Q = 20

(b) The autarky price is the price at which the quantity demanded equals the quantity supplied in the absence of trade. This occurs at the intersection of the demand and supply curves.

On the graph, the intersection occurs when Q = 10 and P = 30. Therefore, the autarky price of good A in Bolivia is 30.

I hope that helps!

User Pavel Gurkov
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