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Jul 17, 2023 · Combine import demand and export supply curves to depict a free trade equilibrium under the assumption that the countries are large. Use an import demand and export supply diagram to depict a free trade equilibrium under the assumption that the import country is small.
Learning Objectives. Use supply and demand to derive import demand curves and export supply curves. Combine import demand and export supply curves to depict a free trade equilibrium under the assumption that the countries are large.
Learn how to depict a free trade equilibrium on a PPF diagram in the Heckscher-Ohlin (H-O) model.
Jul 17, 2023 · Learn how to depict a free trade equilibrium on a PPF diagram in the Heckscher-Ohlin (H-O) model.
International Trade Equilibrium “Free-trade equilibrium”: when the relative price of wheat/cloth is the same in the two countries We need to solve for: • the relative price of wheat/cloth at equilibrium • production and consumption in Home and Foreign 3 Patterns of International Trade
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Start from Integrated Equilibrium competitive equilibrium that would prevail if both goods and factors were freely traded. Consider Free Trade Equilibrium competitive equilibrium that pre-vails if goods are freely traded, but factors are not.
Characterization of free trade equilibrium boils down to finding (zz, ω) using effi cient international specialization and trade balance. Problem is that this approach does not easily extend to economies with more than two countries. In the two-country case, each country specializes in the goods in which it has a CA compared to the other country
