In the Equilibrium Trading Position in a Two-Country Model of Trade

question 9

Essay

In the equilibrium trading position in a two-country model of trade, why must the trade triangles of the two countries be congruent (identical)? What role does the slope of the world price line play in making the triangles congruent?

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Definitions:

Norms

Established standards of behavior or guidelines that are considered acceptable within a certain group or society.

Monopolize Leadership

The act of dominating leadership roles or positions to the exclusion of others.

Traditional Authority

The norm in tribal and feudal societies, involves rulers inheriting authority through family or clan ties. The right of a family or clan to monopolize leadership is widely believed to be derived from the will of a god.

Higher Principle

An overarching ethical or moral standard that guides decisions and actions, often prioritized over other considerations.