Suppose the Domestic Supply (Q^S_{U Demand (Q^D) and Supply (Q^S) in the Rest of the the United}

question 31

Multiple Choice

Suppose the domestic supply (Q^S_U.S.) and demand (Q^D_U.S) for bicycles in the United States are given by the following set of equations: $$\begin{array} { l } Q ^ { \mathrm { S } } \mathrm { U.S } . = 2 \mathrm { P } \\\mathrm { Q } _ { ^\mathrm { D } U . S } = 200 - 2 \mathrm { P } .\end{array}$$ Demand (Q^D) and supply (Q^S) in the Rest of the World are given by the equations: $$\begin{array} { l } Q ^ { S } = P \\Q ^ { D } = 160 - P .\end{array}$$ Quantities are measured in thousands and price in U.S. dollars. After the opening of free trade with the United States, if the world price of the bicycles settles at $60, the Rest of the World will:

• A)export 40,000 bicycles.
• B)export 60,000 bicycles.
• C)import 60,000 bicycles.
• D)import 40,000 bicycles.

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