1. The demand function for a set of tires in nation A is Q=600-P while the supply functions is Q=-100+P. In nation B, the demand function is Q=1200-P and the supply function is Q=-200+P. The nations are initially in a state of autarky.

a. Graph the demand and supply function for each nation.

b. Determine the equilibrium price and quantity for tires in each nation.

Suppose the world price for a set of tires is $500 and the two nations begin to trade:

c. Determine the quantity imported or exported in each nation.

d. Determine the consumer surplus in each nation before and after trade.

e. Determine the producer surplus in each nation before and after trade.

f. Determine the net gain or loss from trade in each nation.

2. Two nations produce the same two goods. The following table represents their productive abilities and capacities