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1. Assume two countries, Thailand (T) and Japan (J), have one good: cameras. The demand (d) and supply (s) for cameras in Thailand and Japan is described by the following functions:
Qd(T)= 60 - P
Qs(T)= - 5 +1/4 P
Qd(J)= 80 - P
Qs(J)= - 10 + 1/2 P
P is the price measured in a common currency used in both countries, such as the Thai
Baht.
3-1) Compute the equilibrium price (P) and quantities (Q) in each country without trade.
3-2) Now assume that free trade occurs. The free-trade price goes to 56.36 Baht. Who exports and imports cameras and in what quantities?
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