We focus on the market of a particular good in Country A. Back in 2019, there were many (domestic) suppliers from Country A and many (foreign) suppliers from Country B all serving consumers in Country A. We ignore consumers of this good in any country other than Country A. The market is assumed to be perfectly competitive. Due to a trade war, all foreign suppliers from Country B disappeared. Consequently, the market supply was halved after the trade war at every possible market price. (a) [15 marks]Comparing the competitive equilibria before and after the trade war, do you think the quantity in the new equilibrium is higher than, equal to, or lower than half the quantity in the old equilibrium? Explain your reasoning. Your answer should not be specific to any particular demand and supply curves. (Limited to 100 words.) (b) [20 marks]For the rest of the question, assume that the market demand curve is 푞 = 21 − 3푝 and the market supply curve before the trade war is 푞 = 4푝. Hence, the market supply curve after the trade war is 푞 = 2푝. Find the competitive equilibria before and after the trade war. (c) [15 marks]Compute the change of consumer surplus due to the trade wa

International trade makes markets more competitive.

A product is produced in a monopolistically competitive industry with scale economies. If thisindustry exists in two countries, and these two countries engage in trade with each other, then wewould expectA) the country with a relative abundance of the factor of production in which production of theproduct is intensive will export this product.B) the countries will trade only with other nations they are not in competition with.C) the country in which the price of the product is lower will export the product.D) neither country will export this product since there is no comparative advantage.E) each country will export different varieties of the product to the other.

When the terms of trade risesGroup of answer choicesThe relative prices of export goods decreaseConsumers who prefer foreign goods are better off.The price index of import goods increasesThe country is unambiguously worse off

Intra-industry trade will tend to dominate trade flows when which of the following exists?A) large differences between relative country factor availabilitiesB) small differences between relative country factor availabilitiesC) uneven distribution of abundant resources between two countriesD) homogeneous products that cannot be differentiatedE) constant cost industries

Which condition does not have to hold in a trade equilibrium of a Ricardian modelGroup of answer choicesExport from one country is equal to import to anotherCosts of imported goods are equal to costs of exported goods for both countriesReal wages are equalized in two countriesWorld price lies between autarky prices in both countries