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Question: two countries produce and consume bushels of corn the us...

Question details

P ($) ROW P ($) 22 20 18 16 14 12 10 8 6 4 2 U.S I ROW 20 18 16 14 12 10 8 6 4 2 ROW 0 2 6 10 14 18 22 26 Q 0 2 6 10 14 18 4 812 16 20 24 28 (M.) 4 8 1216 20 (M.)

Two countries produce and consume bushels of corn: the US and the ROW. The domestic markets for

the two countries are depicted above. The two countries trade with one another and there are no

transportation costs and no trade barriers.

a. Draw the import demand and export supply functions making sure to identify the P-intercepts. Note the equilibrium traded quantity (imports = exports) and the equilibrium world price.

b. How much is produced (supplied) in the US after trade is opened? How much is consumed (demanded)?

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