Answered: How the equilibrium relative commodity…

How the equilibrium relative commodity prices can be set with trade according to the equilibrium analysis? Explain the attached picture.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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How the equilibrium relative commodity prices can be set with trade according to the equilibrium analysis? Explain the attached picture.

60
50
40
30
20
10
0
G'
C'
PA' = 4
10
20
PF¹ = 2
H'
30
H
C
40
Nation 1
E'
PF = 1/2
50
PA==
E
G
PB = PB¹ = 1
Nation 2
60
X

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