If S = P represents a country's home supply curve and D = 100 – P represents its home demand curve, then the equilibrium price and quantity in autarky are:

Question

BlackTom AI · Accepted Answer

Consider the autarky setup where the home supply curve is S = P and the home demand curve is D = 100 − P.
First, translate these into quantity supplied and demanded as functions of price: Qs = P and Qd = 100 − P.
To find the autarky equilibrium, set quantity supplied equal to quantity demanded: P = 100 − P.
Solving gives 2P = 100, so P = 50. Substituting back, Qs = 50 and Qd = 50, so the equilibrium quantity is 50 units.
Now evaluate each option:
Option 1: $50 and 50 units. This matches both the equilibrium price and equilibrium quantity derived above, so it is consistent with autarky.
Option 2: $0 and 100 units. If price were 0, quantity supplied would be 0 and quantity demanded would be 100, which is not an equilibrium since supply does not equal demand at P = 0.
Option 3: $100 and 0 units. At price 100, quantity supplied would be 100 and quantity demanded would be 0, again not an equilibrium because Qs ≠ Qd at P = 100.
Option 4: $75 and 25 units. Here Qs = 75 and Qd = 25, which are not equal, so this price-quantity pair does not satisfy the equilibrium condition Qs = Qd.
In summary, only the first option aligns with the equilibrium condition derived from equating supply and demand given S = P and D = 100 − P.

01:220:300:01 INTERNATIONAL ECON Trade barriers practice questions (not for credit)

If S = P represents a country's home supply curve and D = 100 – P represents its home demand curve, then the equilibrium price and quantity in autarky are:

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01:220:300:01 INTERNATIONAL ECON Trade barriers practice questions (not for credit)

If S = P represents a country's home supply curve and D = 100 – P represents its home demand curve, then the equilibrium price and quantity in autarky are:

View Explanation

Log in for full answers

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