a Standard model of a Trading Economy The standard trade model is built on four key relationships Production possibility frontier and the relative suppl curve Relative prices and relative demand World relative supply and world relative demand Terms of trade and national welfare Copyright C 2003 Pearson Education, Inc Slide 5-5Copyright © 2003 Pearson Education, Inc. Slide 5-5 A Standard Model of a Trading Economy ▪ The standard trade model is built on four key relationships: • Production possibility frontier and the relative supply curve • Relative prices and relative demand • World relative supply and world relative demand • Terms of trade and national welfare