Where QD and QS represent the quantities demanded and supplied in both countries (in billions of tons) and P represents the Dollar price per ton of corn in each country.
a. Graph the US and European Union supply and demand curves for corn (what are the intercepts?).
b. Determine the US and European Union equilibrium prices in the absence of trade.
c. Find the surplus (or shortage) in both countries at the price of $ 20.
Equations for corn:
EU = 70 - 2 PEU
EU = 20 + 3PEU
US = 130 - 3PUS
US = 30 + PUS