Question: a. 10 points. Solve for the optimal quantity and price under autarky. Show in a graph the equilibrium under autarky. Suppose international trade is allowed,
a. 10 points. Solve for the optimal quantity and price under autarky. Show in a graph the equilibrium under autarky. Suppose international trade is allowed, with a unit transportation cost of 1. b. 5 points. Write down the optimal condition for the foreign producer that exports to the home country. Use it to write qf , the amount of exports from foreign to home country, as a function of the equilibrium price c. 5 points. Write down the optimal condition for the home producer that sells to the home country. Use it to write qh , the amount of domestic sales in the home country, as a function of the equilibrium price d. 5 points. Combine the aggregate demand curve with the fact that q= qf qh, to solve for the equilibrium price under trade e. 5 points. Are firms reciprocally dumping? If so, why is it profitable
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