Answer to Question #284031 in Economics for Hafsa

Question

What is meant by the equilibrium-relative commodity price in isolation? How is this price determined in each nation? How does it define the nation’s comparative advantage? 

Answer 1

It is the price where the country has been maximized the welfare of the people. It is determined by the slope of tangent between production possibility frontier (PPF) and indifference curve at the isolation point of production of a nation and there is summation indifference curve of the whole nation.