Question: 4 smallville a small economy producing palm oil mostly in...
4. Smallville, a small economy, producing palm oil mostly. In the market of palm oil, domestic demand and domestic supply equations are: P = 5000 – 0.5Q, and P = 1.5 Q respectively. If Smallville embraces free trade and the world price is $3,000 per unit, which of the following will happen (hint: calculate each demand and supply using the price of $3,000):
|Smallville will import 3,000 units|
|Smallville will export 2,000 units|
|Smallville will export 3,000 units|
|Smallville will import 2,000 units|