economics Economics () is the social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour and intera ...

and particularly in international trade, an offer curve shows the quantity of one type of product that an agent will export ("offer") for each quantity of another type of product that it imports. The offer curve was first derived by

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economists

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and

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to help explain international trade. The offer curve is derived from the country's PPF. We describe a Country named K which enjoys both goods Y and X. It is slightly better at producing good X, but wants to consume both goods. It wants to consume at point C or higher (above the PPF). Country K starts in

Autarky Autarky is the characteristic of self-sufficiency, usually applied to societies, communities, states, and their economic systems. Autarky as an ideal or method has been embraced by a wide range of political ideologies and movements, especially ...

at point C. At point C, country K can produce (and consume) 3 Y for 5 X. As trade begins with another country, and country K begins to specialize in producing good X. When it produces at point B, it can trade with the other country and consume at point S. We now look at our Offer curve and draw a ray at the level 5 Y for 7 X. When full specialization occurs, K then produces at point A, trades and then consumes at point T. The price has reduced to 1 Y for 1 X, and the economy is now at equilibrium. The trade is balanced at the equilibrium.

References

Salvatore, Dominick. "International Economics." John Wiley & Sons, Inc, 2001.
International economics Microeconomics Economics curves {{microeconomics-stub