In a two-nation model, the equilibrium world price will occur where:

Question

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In a two-nation model, the equilibrium world price will occur where one nation's export supply curve intersects the other nation's import demand curve. This is because the export supply curve represents the quantity of goods that a country is willing to export at different prices, while the import demand curve represents the quantity of goods that a country is willing to import at different prices. The intersection of these two curves represents the point where both countries are willing to trade at the same price, which is the equilibrium world price.

In a Two-Nation Model, the Equilibrium World Price Will Occur