Offer Curve Described
The Offer Curve is derived from the country's PPF. We describe a Country named K which enjoys both goods Y and X. It is slightly better at producing good X, but wants to consume both goods. It wants to consume at point C or higher (above the PPF). Country K starts in Autarky at point C. At point C, country K can produce (and consume) 3 Y for 5 X. As trade begins with another country, and country K begins to specialize in producing good X. When it produces at point B, it can trade with the other country and consume at point S. We now look at our Offer curve and draw a ray at the level 5 Y for 7 X. When full specialization occurs, K then produces at point A, trades and then consumes at point T. The price has reduced to 1 Y for 1 X, and the economy is now at equilibrium
An extremely useful link for understanding offer curves can be found at: http://www-personal.umich.edu/~alandear/glossary/figs/OfferCurve/oc.html#
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Famous quotes containing the words offer and/or curve:
“Of all the nations in the world, the United States was built in nobody’s image. It was the land of the unexpected, of unbounded hope, of ideals, of quest for an unknown perfection. It is all the more unfitting that we should offer ourselves in images. And all the more fitting that the images which we make wittingly or unwittingly to sell America to the world should come back to haunt and curse us.”
—Daniel J. Boorstin (b. 1914)
“And out again I curve and flow
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—Alfred Tennyson (1809–1892)