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

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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