QUESTION 1 The following table describes the market for apples in Europe and Jap

Question

QUESTION 1 The following table describes the market for apples in Europe and Japan, the only two countries in this world. The only other commodity is oranges. Consequently, the price of an apple in the table is measured in oranges. Europe Price Quantity Demanded Quantity Supplied Price Quantity Demanded Quantity Supplied 10 Japan 10 14 10) 4 4 10 4 4 12 In Europe under autarky, the price of an apple is and the quantity of apples bought and sold is (Simply enter the correct numbers in the answer boxes.)

Explanation / Answer

Autarky means a closed economy with no international trade. This country reaches equilibrium at the point where demand equals supply.

In Europe, at P = $8, D = S = 4

In Japan, at P = $2, D = S = 4

Under free trade, the price is somewhere between two countries' price and is same in both countri.

It is more than autarky price in Japan, and less than autarky price in Europe.$6 is between 8 and 4.

Under free trade, P = 6 in Europe and Japan.

Blanks

8, 4

2, 4

6, 6

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