Question: China can produce sneakers with an average cost function given by ACCHN = 8 {1+OS ) ,while the United States can produce sneakers with an

China can produce sneakers with an average cost function given by ACCHN = 8 {1+OS ) ,while the United States can produce sneakers with an average cost function given by ACUS = 12 {1+GS J . The demand for sneakers in each country is the same, and is given bythe function P = 205QS. b] Determine the price and quantity of sneakers sold in each country in autarky. c] |fthe two countries open to trade, determine the world price of sneakers and the quantity of sneakers produced in each country. {Hint: |fautarkic demands are equal, then world demand will be twice the quantity at every given price) d) Imagine the United States was the only country producing sneakers in 2016. Then, in 2011 China develops the technology to potentially produce sneakers. lf China has the ability to produce sneakers in 2017, what will be the world price of sneakers and the quantity of sneakers produced in each country in 2017

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