Answer to Question #133742 in Economics for Neba

Question

Given that the demand for good X is more elastic in country A than country B while the supply conditions are the same, answer the following questions based on graphical illustration.

A) compare the before trade price of X in country A and B?

B) which country will be importer of X and which country will be exporter?

C) what will happen to the price of X in country A and country B spring the process of international trade?

D) what does the price change in country A result on quantity demand, quantity supply of domestic producers, and supply?

E) what does the price change in country B result on quantity demand, quantity supply of domestic producers, and demand?

Answer 1

A) We can't compare the before trade price of X in country A and B without the illustration.

B) We can't conclude which country will be importer of X and which country will be exporter without the illustration.

C) The price of X in country A and country B will become the same during the process of international trade.

D) The price change in country A will result in either increase or decrease in quantity demanded, and either decrease or increase in quantity supplied of domestic producers.

E) The price change in country B will result in either increase or decrease in quantity demanded, and either decrease or increase in quantity supplied of domestic producers.