|Question||Sketch a figure similar to Figure 4.5.
(a) Extend the PF’ price line, and the offer curve of Nation 1 until they cross. (In extending it, let the offer curve of Nation 1 bend backward.)
(b) Using the figure you sketched, explain the forces that push PF’ toward PB in terms of commodity Y.
(c) What does the backward-bending (negatively sloped) segment of Nation 1’s offer curve indicate?