Answer Happy

Assume that there are only two countries in the world: Venezuela
and the U.S.
Venezuela’s demand curve for oil drilling rigs is (all
prices are in millions of U.S. dollars):
Qd = 440 - 20 P
Its supply curve is:
Qs = 120 + 30 P
a) Derive and graph Venezuela’s import demand
schedule. What would the price of oil drilling rigs in the
absence of trade be? (7p)
Now add the U.S., which has a demand curve (all prices are in
millions of U.S. dollars):
Qd = 500 - 70 P
and a supply curve:
Qs = 100 + 30 P
b) Derive and graph the U.S. export supply curve, and find the
price of oil drilling rigs that would prevail in the U.S. in
the absence of trade.(7p)
c) Now allow Venezuela and the U.S. to trade with each
other. Find and graph the equilibrium under free trade.
What is the world price? What is the volume of trade?
(6p)