Answer to Question #292788 in Economics for Hafsa

Question

What do offer curves show? How are they derived? What is their shape? What explains their shape? 

Answer 1

The offer curve shows all pairs of imports and exports implied by the production possibilities of an economy and the indifference curves. The offer curve is generated by varying the price ratio of the goods that can be traded.

An offer curve is also called as the “reciprocal demand curve” or international demand curve. An offer curve shows how the volumes traded change when the terms of change. Thus, offer curve is the locus of the pair of export and import quantities desired at each possible price-ratio.