Question

The shape of offer curve will be...​

Answer 1

A perfectly elastic offer curve means that a country is willing to offer its exports in return for imports of a certain fixed ratio of exchange, which never changes no matter how much it imports or exports. In this case it is impossible for the home country to change its terms of trade no matter what it does to its tariffs. The terms of trade at (s) are the same as they were at ( R )....

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