◦ The relative price of cloth to food is determined by the intersection of relative demand and relative supply for that country indifference curve is tangent to the production possibilities frontier relative to the price of imports ◦ World demand for cloth relative to food at each relative price
terms of trade
Relative supply, relative demand relative prices • Trade possibilities and gains from Home has a labor supply of 1000 • Find and graph the Home PPF C
Krugman Slides
Assume identical homothetic indifference curves Solve: downward-sloping relative (or ratio) demand function X / Y = f(P X relative supply and demand meet
ECO
b) Calculate their autarky relative prices of good X, px/py A: autarky px/py sloping relative demand curve, RD, must intersect the relative supply curve in its
set a
f) Graph the relative demand curve along with the relative supply curve g) What is the equilibrium relative price of apples? Describe the pattern of trade h) Show
PS
2 3 Production Possibility Frontier Constructing Relative Supply Curves Putting Things Together: Relative Supply and Demand Small graphs on slides 3-5, 7,
MIT F Lecture
However, the main results of the Ricardian model do not depend on the exact shape of the relative demand curve so we only impose that it is downward sloping
Topic Ricardian trade theory
The relative demand curve is indicated by RD; the relative supply curve is indicated by RS World general equilibrium requires that rela- tive supply equal relative
krugman
and relative price of goods: ? Consume at point D where the isovalue line is tangent to the indifference curve. ? Economy exports cloth – the quantity of
Autarky – Relative demand. Slide 12. - To close the model we add a relative demand curve which describes how the relative demand of cheese
Feb 4 2011 EXCHANGE MODEL CONTINUED. RELATIVE SUPPLY AND DEMAND. Assume identical homothetic indifference curves. Optimum consumer choice when MRS = P.
Sep 14 2006 Graph the relative demand curve. Calculate the relative price Pc/Pw of cheese in world trade equilibrium. Calculate the production of Qc
Panel (b) in Figure 6-4 shows the relative supply and demand curves associated For general preferences the relative demand curve will depend on the ...
2) “Import demand curve”: amount of wheat that. Foreign will import at various relative prices. Notes: • Import demand curve synthesizes Foreign country.
Feb 22 2011 The relative demand in France is the same as that in this world. ... Therefore the MRS along an indifference curve is.
tend to confuse relative demand and relative supply curves from different models (Leontief preferences versus Cobb-Douglas preferences
raised the relative demand for more-educated and flexible workers and reduced the demand observed prices and quantities must be "on the demand curve." ...
rising wage inequality and the increased relative demand for skills. outcome there has to have been an outward shift in the relative demand curve.
Relative supply and relative demand The terms of trade and welfare