Fill in the Blanks? The is explained in where OE is the offercurve of England for wheat and OG is the offer curve of Germany for watches. Point A represents the free trade equilibrium where OE and OG curves intersect. England exchanges OC of wheat for OL of watches at OT equilibrium is Bat which OC, of wheat is exchanged for OL, of watches at OT, terms of trade. As Germany's offer OGIS inelastic in the AB range, there is improvement in the terms of trade of England ie. the slope of OT, > OT. Consequently, England exchanges a smaller quantity OC, of its exportable wheat for a larger quantity OL, of its importable watches, ie, a > On These new terms of trade mean an improvement in the price of the exportable good wheat. So far as the effect of tariff on the relative price of the importable watches in the domestic market is concemed, it will be lower. The total amount of -f being DB, the domestic consumers pay OC, of exportable wheat in orderto get OL, of importable watches. Thus domestic relative price P/PM=price of wheat/price of watches has increased. It means that the relative price of exportable wheat has increased and of the importable watches has fallen in the domestic market after the imposition of tariff, i.e. OCJOL,