Who benefits and who loses initially from free trade

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Reference no: EM131403066

The following table presents the demand and supply curves for microcomputers in Japan and the United States.

a. Draw the demand and supply curves for the United States on one diagram and those for Japan on another one.

b. If the United States and Japan do not trade, what are the equilibrium price and quantity in the computer market in the United States? In Japan?

c. Now suppose trade is opened up between the two countries. What will be the equilibrium price in the world market for computers? What has happened to the price of computers in the United States? In Japan?

d. Which country will export computers? How many?

e. When trade opens, what happens to the quantity of computers produced, and therefore employment, in the computer industry in the United States? In Japan? Who benefits and who loses initially from free trade?

Reference no: EM131403066

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