The Production possibility curve represents the supply side in international trade. It shows the various alternative combinations of the two commodities that a country can produce more efficiently by fully utilizing the factors of production with the available technology. It represents the demand side in international trade. A commodity difference curve shows the various combinations of two commodities which yield the same satisfaction to a community.
2. The Offer Curve
Another important tool in international economics is the offer curve or reciprocal demand curve.The offer curve of a country returns the relative commodity price at which trade takes place.It shows various quantities of its exportable commodity.A country is willing to exchange for an importable commodity at various international prices.
3. The Trade Indifference Curve
It is a technique used to show the import of trade on consumption output and gains from trade. A trade indifference curve shows changes in domestic production and consumption as well as in real income from shifts in terms of trade and volume of trade.
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