international market
DESCRIPTION
Here is our now familiar graph with 2 regions trading 1 good. International Market. MS. FL. Now let’s draw the Export Supply and Import Demand curves. International Market. MS. FL. Just for the sake of argument, suppose that p FL prevailed in MS. - PowerPoint PPT PresentationTRANSCRIPT
![Page 1: International Market](https://reader036.vdocuments.mx/reader036/viewer/2022082517/56812dfa550346895d93581a/html5/thumbnails/1.jpg)
MS FLInternationalMarket
Here is our now familiar graph with 2 regions trading 1 good.
![Page 2: International Market](https://reader036.vdocuments.mx/reader036/viewer/2022082517/56812dfa550346895d93581a/html5/thumbnails/2.jpg)
MS FLInternationalMarket
Now let’s draw the Export Supply and Import Demand curves.
![Page 3: International Market](https://reader036.vdocuments.mx/reader036/viewer/2022082517/56812dfa550346895d93581a/html5/thumbnails/3.jpg)
MS FLInternationalMarket
Just for the sake of argument, suppose that pFL prevailed in MS.Then MS supplier would produce more than MS consumers would want to buy. That difference in quantity would then be offered on the International Market.
pFL
pMS
![Page 4: International Market](https://reader036.vdocuments.mx/reader036/viewer/2022082517/56812dfa550346895d93581a/html5/thumbnails/4.jpg)
MS FLInternationalMarket
We need to figure out (graphically) how big that quantity is.
pFL
pMS
![Page 5: International Market](https://reader036.vdocuments.mx/reader036/viewer/2022082517/56812dfa550346895d93581a/html5/thumbnails/5.jpg)
MS FLInternationalMarket
It would correspond to the thick segment in the left graph below.
pFL
pMS
![Page 6: International Market](https://reader036.vdocuments.mx/reader036/viewer/2022082517/56812dfa550346895d93581a/html5/thumbnails/6.jpg)
MS FLInternationalMarket
We report that segment in the center graph.
pFL
pMS
![Page 7: International Market](https://reader036.vdocuments.mx/reader036/viewer/2022082517/56812dfa550346895d93581a/html5/thumbnails/7.jpg)
MS FLInternationalMarket
Of course, if pMS were to prevail in MS, then domestic consumption would equal domestic supply and export would be zero. We thus now have two points to draw MS’s export supply curve.
pFL
pMS
![Page 8: International Market](https://reader036.vdocuments.mx/reader036/viewer/2022082517/56812dfa550346895d93581a/html5/thumbnails/8.jpg)
MS FLInternationalMarket
One point is here…
pFL
pMS
![Page 9: International Market](https://reader036.vdocuments.mx/reader036/viewer/2022082517/56812dfa550346895d93581a/html5/thumbnails/9.jpg)
MS FLInternationalMarket
…and the other one is there.
pFL
pMS
![Page 10: International Market](https://reader036.vdocuments.mx/reader036/viewer/2022082517/56812dfa550346895d93581a/html5/thumbnails/10.jpg)
MS FLInternationalMarket
Now let’s draw the export supply curve.
pFL
pMS
![Page 11: International Market](https://reader036.vdocuments.mx/reader036/viewer/2022082517/56812dfa550346895d93581a/html5/thumbnails/11.jpg)
MS FLInternationalMarket
OK. We can go ahead and remove the thick lines and the two points. They’ve served their purpose.
pFL
pMS
![Page 12: International Market](https://reader036.vdocuments.mx/reader036/viewer/2022082517/56812dfa550346895d93581a/html5/thumbnails/12.jpg)
MS FLInternationalMarket
We now repeat the same exercise to plot the import demand curve, so let’s look at Florida.
pFL
pMS
![Page 13: International Market](https://reader036.vdocuments.mx/reader036/viewer/2022082517/56812dfa550346895d93581a/html5/thumbnails/13.jpg)
MS FLInternationalMarket
If pFL prevails in Florida, then FL will not import anything, as represented by the point.
pFL
pMS
![Page 14: International Market](https://reader036.vdocuments.mx/reader036/viewer/2022082517/56812dfa550346895d93581a/html5/thumbnails/14.jpg)
MS FLInternationalMarket
If pMS were to prevail in Florida, then FL would import a quantity corresponding to the thick segment.
pFL
pMS
![Page 15: International Market](https://reader036.vdocuments.mx/reader036/viewer/2022082517/56812dfa550346895d93581a/html5/thumbnails/15.jpg)
MS FLInternationalMarket
Report that segment in the international market and you get a second point with which to plot the import demand curve.
pFL
pMS
![Page 16: International Market](https://reader036.vdocuments.mx/reader036/viewer/2022082517/56812dfa550346895d93581a/html5/thumbnails/16.jpg)
MS FLInternationalMarket
Report that segment in the international market and you get a second point with which to plot the import demand curve.
pFL
pMS
![Page 17: International Market](https://reader036.vdocuments.mx/reader036/viewer/2022082517/56812dfa550346895d93581a/html5/thumbnails/17.jpg)
MS FLInternationalMarket
Let’s clean up and remove the thick line and the dots. They are now just in the way.
pFL
pMS
![Page 18: International Market](https://reader036.vdocuments.mx/reader036/viewer/2022082517/56812dfa550346895d93581a/html5/thumbnails/18.jpg)
MS FLInternationalMarket
The intersection of the export supply and import demand curves reveals the “World Market” price, pW.
pFL
pMS
pW
![Page 19: International Market](https://reader036.vdocuments.mx/reader036/viewer/2022082517/56812dfa550346895d93581a/html5/thumbnails/19.jpg)
MS FLInternationalMarket
That’s all folks!
pW