Foreign Export Supply In panel (a), with Foreign demand of D^* and Foreign supply of S^*, the no-trade equilibrium in Foreign is at point A^*, with the price of P^A*. At this price, the Foreign market is in equilibrium and Foreign exports are zero—point A^* in panel (a) and point A^*′ in panel (b), respectively. When the world price P^W is higher than Foreign’s no-trade price, the quantity supplied by Foreign, S^*₁, exceeds the quantity demanded by Foreign, D^*₁, and Foreign exports

= S^*₁ − D^*₁. In panel (b), joining up points A^*′ and B^*, we obtain the upward-sloping export supply curve X^*. With the Home import demand of M, the world equilibrium is at point B^*, with the price P^W.