Given: (1)two Nations (1 and 2)which Have the Same Technology

Essay

Given: (1)two nations (1 and 2)which have the same technology but different factor endowments and tastes, (2)two commodities (X and Y)produced under increasing costs conditions,and (3)no transportation costs,tariffs,or other obstructions to trade.Prove geometrically that mutually advantageous trade between the two nations is possible.Note: Your answer should show the autarky (no-trade)and free-trade points of production and consumption for each nation,the gains from trade of each nation,and express the equilibrium condition that should prevail when trade stops expanding.)