ECON 1269 International Trade

Preparation for Midterm 2

Offer Curves: Knowledge Summary
Blue curve is the Original Offer Curve ; Red curve is the New Offer Curve.

Nation A: exports good X, and imports good Y. Nation B: imports good X, and exports good Y.
Nation As Offer Curve rotates rightward when:
Price of good X falls when: . Demand of good X falls, and/or
. Supply of good X rises.
Excess Supply (Deficient Demand) of Exportable good X.
Price of good Y rises when: . Demand of good Y rises, and/or
. Supply of good Y falls.
Excess Demand of Importable good Y.
Nation Bs Offer Curve rotates rightward when:
Price of good X falls when: . Demand of good X falls, and/or
. Supply of good X rises.
Excess Supply (Deficient Demand) of Importable good X.
Price of good Y rises when: . Demand of good Y rises, and/or
. Supply of good Y falls.
Excess Demand of Exportable good Y.
The results are that:
1. Nation A is willing to export less and import more;
2. Nation As Export Volume falls and Import Volume rises;
3. Nation As Terms of Trade deteriorates.
The results are that:
1. Nation B is willing to export more and import less;
2. Nation Bs Export Volume rises and Import Volume falls;
3. Nation Bs Terms of Trade improves.


Nation A: exports good X, and imports good Y. Nation B: imports good X, and exports good Y.
Nation As Offer Curve rotates leftward when:
Price of good X rises when: . Demand of good X rises, and/or
. Supply of good X falls.
Nation Bs Offer Curve rotates leftward when:
Price of good X rises when: . Demand of good X rises, and/or
. Supply of good X falls.
Excess Demand of Exportable good X.
Price of good Y falls when: . Demand of good Y falls, and/or
. Supply of good Y rises.
Excess Supply (Deficient Demand) of Importable good Y.
Excess Demand of Importable good X.
Price of good Y falls when: . Demand of good Y falls, and/or
. Supply of good Y rises.
Excess Supply (Deficient Demand) of Exportable good Y.
The results are that:
1. Nation A is willing to export more and import less;
2. Nation As Export Volume rises and Import Volume falls;
3. Nation As Terms of Trade improves.
The results are that:
1. Nation B is willing to export less and import more;
2. Nation Bs Export Volume falls and Import Volume rises;
3. Nation Bs Terms of Trade deteriorates.
()

Offer curve bows towards the export side