2) Assume that there are two countries producing X and Y. While = 5 in country...

 

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2) Assume that there are two countries producing X and Y. While = 5 in country 1, Py in country 2. Based on this information answer the following questions. In your answer, you can determine the amount of exports and imports between two countries but you should clearly state these values. On your graphs, clearly label all variables (i.e. autarky consumption and production, open economy consumption and production points, relative price etc.). a) Derive the offer curve for country 1(Note that it is not enough to draw offer curves, you need to show the derivation) b) Derive the offer curve for country 2. c) Show two offer curves on the same graph and denote the equilibrium level. d) On the offer curve, show a point at which there is no equilibrium and explain. 2) Assume that there are two countries producing X and Y. While = 5 in country 1, Py in country 2. Based on this information answer the following questions. In your answer, you can determine the amount of exports and imports between two countries but you should clearly state these values. On your graphs, clearly label all variables (i.e. autarky consumption and production, open economy consumption and production points, relative price etc.). a) Derive the offer curve for country 1(Note that it is not enough to draw offer curves, you need to show the derivation) b) Derive the offer curve for country 2. c) Show two offer curves on the same graph and denote the equilibrium level. d) On the offer curve, show a point at which there is no equilibrium and explain.

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