Question

How can the supply curve of exports and the demand curve of imports of a commodity be derived from the total demand and supply curves of a commodity in the two nations?

Answer 1

A country will export when its domestic quantity supplied is greater than the domestic quantity demanded. Therefore the export supply curve can be determined by the excess supply function which is the difference between the domestic supply and domestic demand. ES = QS - QD (EXPORT SUPPLY FUNCTION)

All country will import when its domestic quantity supplied is less than the domestic quantity demanded. Therefore the import demand curve will be determined by the excess demand function which is the difference between domestic demand and domestic supply. ID = QD - QS (IMPORT DEMAND FUNCTION)