Country A and Country B, use ocean transport to ship bulk materials. Both countries can produce grain, but Country A exports to Country B which has a much larger population.

(a) Draw and explain an appropriate economic model(s) that illus-trate(s) the impact on prices, production, consumption and trade if rising oil prices that raises cost of ocean transport.

(b) Imagine that following the oil price rise, a serious recession occurs that lowers price for ocean transport below where it was before. How would this impact the trade, prices, production, and consumption of grain.