From the left panel of Figure 4.4, derive Nation 2s supply curve of exports of commodity Y.
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From the left panel of Figure 4.4, derive Nation 2’s supply curve of exports of commodity Y. From the left panel of Figure 4.3, derive Nation 1’s demand curve for Nation 2’s exports of commodity Y. Use the demand and supply curves that you derived to show how the equilibrium-relative commodity price of commodity Y with trade is determined.
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140 Nation 2 120- PAa4 85 Pe-2 Pg=1 60 60 Nation 2's offer curve 45 40 G' 40 Pe-1 20 Pe=2 20 40 65 80 100 20 40 60 FISURE AA Derivation of the Offer Curve of Nation 2. In the lot panel Nation 2 starts at pretrade equilibrium point A'. It trade takes place at P -1, Nation 2 moves to point B' in production, exchanges 60Y tor 60X with Nation 1, and reaches point E. This gives point P'in the right panel At P, = 2 in the let panel, Nation 2 would move instead from A' to Pin production, exchange 40Y for 20X with Nation 1, and reach H. This gives point H in the right panel Joining the origin with points H and E in the right panel, we generate Nation 2's offer curve. This shows how many imports of commodity X Nation 2 demands to be wiling to supply various amounts of commodity Y for export. Nation 1 100 Offer curve of Nation 1 80 Pg=1 60 60 45 40 PE PA PF= 20 20 Pg=1 G O 20 0 10 30 50 70 95 130 40 60 55 FIGURE 4.3. Derivation of the Offer Curve of Nation 1. In the let panel Nation 1 starts at pretrade-equilibrium point A. If trade takes place at P - 1, Nation 1 moves to point B in production, exchanges 60X tor 60Y with Nation 2, and reaches point E. This gives point E in the right panel At P, =s in the left panel, Nation 1 would move instead from point A to point Fin production, exchange 40X for 20Y with Nation 2, and reach point H. This gives point H in the right panel. Joining the origin with points H and E in the right panel we generate Nation 1's offer curve. This shows how many imports of commodity Y Nation 1 requires to be willing to export various quantities of commodity X. 140 Nation 2 120- PAa4 85 Pe-2 Pg=1 60 60 Nation 2's offer curve 45 40 G' 40 Pe-1 20 Pe=2 20 40 65 80 100 20 40 60 FISURE AA Derivation of the Offer Curve of Nation 2. In the lot panel Nation 2 starts at pretrade equilibrium point A'. It trade takes place at P -1, Nation 2 moves to point B' in production, exchanges 60Y tor 60X with Nation 1, and reaches point E. This gives point P'in the right panel At P, = 2 in the let panel, Nation 2 would move instead from A' to Pin production, exchange 40Y for 20X with Nation 1, and reach H. This gives point H in the right panel Joining the origin with points H and E in the right panel, we generate Nation 2's offer curve. This shows how many imports of commodity X Nation 2 demands to be wiling to supply various amounts of commodity Y for export. Nation 1 100 Offer curve of Nation 1 80 Pg=1 60 60 45 40 PE PA PF= 20 20 Pg=1 G O 20 0 10 30 50 70 95 130 40 60 55 FIGURE 4.3. Derivation of the Offer Curve of Nation 1. In the let panel Nation 1 starts at pretrade-equilibrium point A. If trade takes place at P - 1, Nation 1 moves to point B in production, exchanges 60X tor 60Y with Nation 2, and reaches point E. This gives point E in the right panel At P, =s in the left panel, Nation 1 would move instead from point A to point Fin production, exchange 40X for 20Y with Nation 2, and reach point H. This gives point H in the right panel. Joining the origin with points H and E in the right panel we generate Nation 1's offer curve. This shows how many imports of commodity Y Nation 1 requires to be willing to export various quantities of commodity X.
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Related Book For
Finite Mathematics and Its Applications
ISBN: 978-0134768632
12th edition
Authors: Larry J. Goldstein, David I. Schneider, Martha J. Siegel, Steven Hair
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