Question

Quantity	Quantity	Quantity	Quantity
Price per	Demanded	Supplied	Demanded	Supplied
TV	in United States	in United States	in Japan	in Japan
(dollars)	(thousands)	(thousands)	(thousands)	(thousands)
200	100	10	100	25
300	85	20	85	50
400	75	35	70	70
450	65	45	65	85
500	50	50	50	90
550	40	60	40	100
600	30	70	30	110
650	20	80	20	120

Table 18-4 presents the demand and supply schedules for television sets in Japan and the United States. If Japan and the United States trade with each other, what will be the equilibrium price and quantity in the world market for television sets?

$200;200

$300;170

$400; 145

$450; 130

Answer 1

Given the above table about the quantity demanded and quantity supplied of television sets in both United States and Japan, in the absence of trade, US equilibrium will be attained at a point where demand = supply.

Thus, US will demand and supply 50 TV sets at the price of $500 each.

Similarly, Japan will demand and supply 70 TV sets at the price of %400 each.

However, if the two countries trade, then the world price for television has to converge to a price between these two domestic prices.

Thus, at a price of $450 per TV, total supply of television in the world market = 45 + 85 = 130 and total demand of television = 65 + 65 = 130 TV

Ans. (D) $450; 130