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FREE TRADE: Suppose FOREIGN's production supply curve rises (eg shifts right/down) a) Show what happens to FOREIGN's ED-ES curve.Explain b) What happens to free-trade prices,

FREE TRADE: Suppose FOREIGN's production supply curve rises (eg shifts right/down)

a) Show what happens to FOREIGN's ED-ES curve.Explain

b) What happens to free-trade prices, equilibrium output, consumption, and imports/exports in each country.Show in a diagram and explain.

c) Does HOME surplus rise?Show and explain.EG identify what happens to consumer and producer surpluses in Home. Relate to Terms Of Trade. d) Does FOREIGN surplus rise?Show and explain.EG identify what happens to consumer and producer surpluses in Foreign. Relate to the Terms Of Trade.

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