ABSTRACT
To demonstrate international equilibrium in a more disaggregated form than is given in the preceding section, it is necessary to make use of another known tool, namely, the price consumption curve. How then can international equilibrium be demonstrated? This can be done geometrically in two ways. First, international equilibrium is established in terms of price consumption curves. Second method is much more general than the first, and it can be easily grasped, at least in the context of the classical theory, once international equilibrium in terms of price consumption curves has been understood. International equilibrium requires that for every commodity, the world supply must be equal to the world demand. The actual proportions of the various commodities making up each composite good are immaterial from the point of view of international equilibrium. Thus, any shifts in the composition of each and every composite good as a result of a shift in demand necessarily leave relative prices undisturbed.
