Suppose that Home is a large exporter of wheat. The domestic inverse supply func

Question

Suppose that Home is a large exporter of wheat. The domestic inverse supply function of Home producers is given by P-40+4Q and the domestic inverse demand function of Home con sumers is given by P-200-4Q where QS and Q are in tons. The import demand function that home producers face in the world wheat market is M. = 100-1. Answer questions 19-25 accordingly. 19) Given the domestic inverse supply and domestic inverse demand functions of the Home country, the export pw supply function of Home can be derived as pw

Explanation / Answer

Export supply function is the difference of domestic supply and domestic demand

Exports = Qs - Qd

= (1/4)P - 10 - (50 + (1/4)P

= (1/2)P - 60

Hence export supply function is X = Pw/2 - 60

Option C is correct

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