Question: consider a model with two countries home and foreign and two goods Z and Y. the demand curve for each good in each country is

consider a model with two countries home and foreign and two goods Z and Y. the demand curve for each good in each country is given by:

D=60-P

The supply curve for Y in home and for Z in foreign is given by:

S=P

while the supply curve for Z home and Y foreign is given by:

S=3P

SHOWING WORKINGS ANSWER THE FOLLOWING...

what is the auturky price of good Y in home and foreign??

(ans is 30 and 15 respectively)

what is the free trade price of good Y?

(ans is 20)

Assume that a specific tariff of $12 is imposed on good Z imports. What is the export price of good Z(the price received by exporters net of tariff)?

(ans is 16)

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