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Q. Demonstrate the demand and supply program for calculators in Norway and Sweden. On graph paper, sketch the demand and supply programs of each country.
a. As in the absence of trade, elucidate the equilibrium price and quantity of calculators formed in Norway and Sweden? In calculators which country has the comparative advantage?
b. Suppose there are no transportation costs. Through trade, elucidate price brings about balance in exports- imports? With trade how many calculators are produced as well as consumed in every country? How many calculators are deals at this price?
c. Assume cost of transporting each calculator from Norway and Sweden is $5. With trade, what is the impact of the shipping cost on the price of calculators in Norway and Sweden? Tell about how many calculators country produce, consume as well as trade?
d. Usually, what can be accomplished about the impact of transportation costs on the price of the traded product in each trading nation? Explain the extent of specialization and the volume of trade?
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