1. Limited time only! Sign up for a free 30min personal tutor trial with Chegg Tutors
    Dismiss Notice
Dismiss Notice
Join Physics Forums Today!
The friendliest, high quality science and math community on the planet! Everyone who loves science is here!

Homework Help: Help with an Econ question regarding gains from trade

  1. Sep 18, 2014 #1
    1. The problem statement, all variables and given/known data

    A free market can be described by the equations Qd = 180 – 3P and Qs = –50 + 2P. What are the equilibrium conditions in this market (that is, find equilibrium P and Q) and what are the maximum gains from trade in this market?




    2. Relevant equations



    3. The attempt at a solution

    To find equilibrium, set Qd=Qs:

    180 – 3P = –50 + 2P

    Solve for P

    P=46

    Plug P into one of the equations to find Q

    Qd = 180 – 3P

    Qd = 180 – 3(46)

    Solve for Q

    Q=42

    That is what is already known but can someone "EXPLAIN" to me how to figure out the gains from trade. Not just give me the answer. Is there an equation you use?
     
  2. jcsd
Share this great discussion with others via Reddit, Google+, Twitter, or Facebook

Can you offer guidance or do you also need help?
Draft saved Draft deleted



Loading...