Use national demand and supply curves to show :

Question

- the incentives for trade to begin between nations.

- the effect on the likely pattern of trade of a change in technology in A that causes A's national supply curve to shift out.

- the effect on the likely pattern of trade of a change in tastes in B in favor of good S.

Answer 1

Just construct demand and supply graph for same markets in different countries with the assumption that price levels should be different - thus suppliers will be wishing to supply more goods at certain price (surplus) which is in another country - it provides incentive to supply goods (export) to another country. Almost the same is true for customers, they will wish to consume more of a good for cheaper price (ind this part may be ensured by foreign suppliers).

Greater competition theoretically will press on domestic producers to become more efficient - thus they will tend to develop intensively, and this will consequently mean motivation to technological growth.