International Trade - Theory and Policy, 2010a

where XSUS(.) is the export supply function, SUS(.) is the supply function for wheat in the United States,
and DUS(.) is the demand function for wheat in the United States. Each function is dependent on the U.S.
price of wheat, PUS.
Figure 7.3 Deriving the U.S. Export Supply Curve
Graphically, export supply is the horizontal difference between the supply and demand curve at every price
at and above the autarky price, as shown in Figure 7.3 "Deriving the U.S. Export Supply Curve". At the
autarky price, PA ut US, export supply is zero. At prices P 1 , P 2 , and P 3 , export supply is given by the length of
the like-colored line segment. To plot the export supply curve XSUS, we transfer each line segment to a
separate graph and connect the points, as shown on the right in Figure 7.3 "Deriving the U.S. Export Supply
Curve". The export supply curve gives the quantities the United States would be willing to export if it faced
prices above its autarky price.
In Mexico, at prices below its autarky price there is excess demand for wheat since demand exceeds
supply. If we consider prices either at or below the autarky price, we can derive an import demand curve
for Mexico. The equation for import demand is given by
MDMex(PMex)=DMex(PMex)−SMex(PMex),
where MDMex(.) is the import demand function, DMex(.) is the demand function for wheat in Mexico,
and SMex(.) is the supply function for wheat in Mexico. Each function is dependent on the Mexican price
of wheat, PMex. Graphically,import demand is the horizontal difference between the demand and supply
curve at every price at and below the autarky price, as shown in Figure 7.4 "Deriving the Mexican Import
Demand Curve". At the autarky price, PA ut Mex, import demand is zero. At prices P 1 , P 2 , and P 3 , import
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