ABSTRACT
This chapter deals with a straightforward supply and demand analysis of international trade. Supply and demand relation may be combined into an excess demand and excess supply relation. In this new form they give the same information and lead to the same equilibrium position as the original supply and demand curves from which they are derived. The technique of supply and demand curves may still be used as a tool of analysis. The possibility, however, of a change in the parameters on which this form depends must be taken into account. The form of a supply function is determined by the prices of the factors of production and by the conditions of technique. The firms are supposed to maximize their profits. The supply and demand relations for exportables and importables may be treated as virtually constant and independent one of the other.
