In this article we will discuss about the multiple equilibria and stability of international trade. The offers curves of two trading countries can determine the position of general equilibrium through the intersection between them. It is possible that the equilibrium occurs not at one unique position but at several positions. Such a situation represents the multiple equilibria. Some of these [...]
J.E. Meade assembled the analytical devices like the production possibility curve, the community indifference curves and offer curves in order to explain the general equilibrium of production, consumption and trade involving the two trading countries. Fig. 4.17 is employed to explain the general equilibrium situation concerning the two trading countries A and B. In Fig. 4.17, the commodity X is [...]
For analysing the trade equilibrium of a country, another device that is employed is the Offer Curve or, more precisely, the Trade Offer Curve of a country. The trade offer curve indicates what quantities of a particular commodity one country are willing to offer in exchange of certain quantities of another commodity. In other words, the offer curve shows the [...]