00:01
So here we're talking trade, right? and let's go through each of these one by one.
00:03
The first answer is that nation one prefers x and two prefers y.
00:15
And so if we're thinking about why, this is my correct answer.
00:19
The idea here is that look at the slope of indifference curves, right? the slope of the indifference curves is telling you something about the preferences.
00:32
Nation 1 is much steeper, and it is tilted towards x.
00:43
You can sort of see that just looking at it, look at the slope, look how much y they're willing to give up for x.
00:52
Sorry, the pen is really dragging this morning.
00:56
They're sort of willing to give up a ton of y, right? that's what the slope of the indifference curve is telling you.
01:08
So for b, they represent the autarky equilibrium, right? this is the equilibrium we would get if there was no trade, right? if the countries just had to do it themselves, this is where you would see those countries choose to locate.
01:32
Okay, so if we keep going now, we have c...