On one set of axes, sketch Nation 1’s supply of exports of commodity X so that the quantity supplied (QS) of X is QSx = 0 at PX / PY = 1/4, QSx = 40 at PX / PY = 1/2, QSx = 60 at PX / PY = 1, and QSx = 70 at PX / PY = 11/2. On the same set of axes, sketch Nation 2’s demand for Nation 1’s exports of commodity X so that the quantity demanded (QD) of X is QDx = 40 at PX / PY = 11/2, QDx = 60 at PX / PY = 1, and QDx = 120 at PX / PY = 1/2.
(a) Determine the equilibrium-relative commodity price of the exports of commodity X with trade.
(b) What would happen if PX / PY were 1 ½
(c) What would happen if PX / PY = 1/2