Consider a two‑nation world consisting of the United States and Mexico, which both produce strawberries. Assume there are no trade barriers or international transportation costs. The tables represent the markets for strawberries in the United States and Mexico. Mexican prices have been converted to U.S. dollars. What is the equilibrium world price per pound? What is the equilibrium quantity of exports and imports? Which country will export strawberries?

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Consider a two‑nation world consisting of the United States and Mexico, which both produce strawberries. Assume there are no trade barriers or international transportation costs. The tables represent the markets for strawberries in the United States and Mexico. Mexican prices have been converted to U.S. dollars.

What is the equilibrium world price per pound?

What is the equilibrium quantity of exports and imports?

Which country will export strawberries?

U.S. market for strawberries
Price
per pound
$2
$3
$4
$5
$6
$7
$8
Quantity supplied
(in millions)
300
350
400
450
500
550
600
Mexican market for strawberries
Price
per pound
$2
$3
$4
$5
$6
$7
$8
Quantity supplied
(in millions)
400
450
500
550
600
650
700
Quantity demanded
(in millions)
500
450
400
350
300
250
200
Quantity demanded
(in millions)
800
750
700
650
600
550
500
Transcribed Image Text:U.S. market for strawberries Price per pound $2 $3 $4 $5 $6 $7 $8 Quantity supplied (in millions) 300 350 400 450 500 550 600 Mexican market for strawberries Price per pound $2 $3 $4 $5 $6 $7 $8 Quantity supplied (in millions) 400 450 500 550 600 650 700 Quantity demanded (in millions) 500 450 400 350 300 250 200 Quantity demanded (in millions) 800 750 700 650 600 550 500
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