Search & Filtering
To show how nations can share unequally in the benefits from trade:
(a) Sketch a figure showing the offer curve of a nation having a much greater curvature than the offer curve of its trade partner.
(b) Which nation gains more from trade, the nation with the greater offer curve or the one with the lesser curvature?
(c) Can you explain why?
In what way is a nation’s offer curve similar to:
(a) a demand curve?
(b) a supply curve? In what way is the offer curve different from the usual demand and supply curves?
In what way does our trade model represent a general equilibrium model? In what way does it not? In what ways does our trade model require further extension?
What does an improvement in a nation’s terms of trade mean? What effect does this have on the nation’s welfare?
What do the terms of trade measure? What is the relationship between the terms of trade in a world of two trading nations? How are the terms of trade measured in a world of more than two traded commodities?
What do the terms of trade measure? What is the relationship between the terms of trade in a world of two trading nations? How are the terms of trade measured in a world of more than two traded commodities?
Under what condition will trade take place at the pre-trade relative commodity price in one of the nations?
Why does the use of demand and supply curves of the traded commodity refer to partial equilibrium analysis? In what way is partial equilibrium analysis of trade related to general equilibrium analysis?
How is a nation’s supply curve of its export commodity and demand for its import commodity derived from the nation’s production frontier and indifference map?
What are the forces that would push any nonequilibrium-relative commodity price toward the equilibrium level?
