Answer to Question #282585 in Economics for Hafsa

Question

How is the combined supply curve of both nations for each of the traded commodities determined? How is the equillibrium-relative commodity price determined with trade?

Answer 1

The combined supply curve of both nations for each of the traded commodities is determined as a sum of national supply of each country.

The equilibrium-relative commodity price with trade is the common relative price in both nations at which trade is balanced.