Question

assume country a exports wheat and imports clothing put the offer curve of country A together with offer curve of country B explain how the equilibrium position is attained if the countries initially are in a situation that is not a position of equilibrium (elastic portion of offer curves) finally suppose that country b's consumers change their tastes so that they now have greater preference for country A's export good than they did previously. illustrate and carefully explain the moment of the old to the new equilibrium position because of this changes in tastes. assuming other things equal . be sure to include an indication of the impact on country a's term of trade and volume of trade

Answer 1