Assume That There Are Only Two Countries in the World

question 59

Essay

Assume that there are only two countries in the world, Pacifica and Atlantica. Both countries produce and consume surfboards. The pre-trade price of surfboards in Atlantica is lower than the pre-trade price of surfboards in Pacifica. Draw a three-graph diagram to depict the Pacifica, Atlantica, and international markets for surfboards illustrating the pre-trade price difference. Now assume that free trade opens up between Pacifica and Atlantica. Depict a plausible world price in the graphs. What happens to overall economic welfare in the two countries? Be sure to label and refer to the graphs in your answer.

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Franchising

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Market Analysis

The study of the market within an industry, including the analysis of supply and demand, target demographic, and competition.

Franchise

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