Problem 55

Introduction

Goods and services can be purchased and sold across international borders with no or little governmental tariffs, quotas, subsidies, or restrictions to obstruct their interchange underneath a free trade policy.

Given: Qd^T = 60 – P          Qs^T = –5 + 1 4 P

        Qd^J = 80 – P             Qs^J = –10 + 1 2 P

P is the price measured in a common currency used in both countries, such as the Thai Baht.