1. In some economies relative supply may be unresponsive to changes in prices. Forexample, if factors of production were completely immobile between sectors, the productionpossibility frontier would...

1. In some economies relative supply may be unresponsive to changes in prices. For example, if factors of production were completely immobile between sectors, the production possibility frontier would be right-angled, and output of the two goods would not depend on their relative prices. Is it still true in this case that a rise in the terms of trade increases welfare? Analyze graphically.