Question

Quantity Quantity Quantity Quantity Price per Demanded Supplied Demanded Supplied TV in United States in United...

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

Homework Answers

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

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