Suppose the domestic supply and demand

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Suppose the domestic supply (Qs) and demand (Qd) for MP3 players in the U.S. are given by the set of equations that follows:

P = 2.5 + 0.1Qs P = 175 – 0.2Qd

A. In the absence of international trade in MP3 players (autarky), the price of MP3 is $60. How many MP3 players will be produced (supplied) and demanded in the United States?

B. If the U.S. can import MP3 players from the rest of the world at a per unit price of $50, how many MP3 players will be produced in the U.S.?

C. If the U.S. can import MP3 players from the rest of the world at a per unit price of $50, what will be the total demand for MP3 players in the United States?

D. If the U.S. engages in free trade and the international price of MP3 players is $50, it would import _____ MP3 players from the rest of the world.

E. Net gain for the United States after trade is ____.

Reference no: EM131170738

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