Question

Refer to Figure 3.6, page 57. Assume that the graph depicts the U.S. domestic market for corn. How many bushels of corn, if any, will the United States export or import at a world price of \(1, \)2, \(3, \)4, and \(5? Use this information to construct the U.S. export supply curve and import demand curve for corn. Suppose that the only other corn-producing nation is France, where the domestic price is \)4. Which country will export corn; which county will import it?

Short answer

The U.S.’s import-export at each price level will be:

Price	Quantity
$1	-15000 (Import)
$2	-7000 (Import)
$3	0
$4	6000 (Export)
$5	10000 (Export)

The U.S. export supply curve and import demand curve for corn are shown below:

The U. S. will export, and France will import.

Step-by-step solution

Step 1. Import/export at different levels of price

The demand and supply schedule for corn in the U. S. is shown below:

The demand and supply at different price levels are given in Figure 3.6

Price	Demand	Supply	Surplus or Shortage
$1	16000	1000	-15000
$2	11000	4000	-7000
$3	7000	7000	0
$4	4000	10000	6000
$5	2000	12000	10000

The import and export are decided when the country has a shortage or surplus, i.e., if the country has a shortage, it will import, and in the case of surplus, it will export.

Step 2. Constructing the export supply and import demand curve

The U.S. export supply curve and import demand curve for corn are shown below:

The curves are based on the surplus (S>D, thus exports) and shortage (D>S, thus imports) values.

Identification of export and Import countries

At $4, the U.S. will export, and France will import, as the U. S. has a surplus of corn.