In the gains from trade diagram in Figure 3-3, suppose that instead of having a rise in
Question:
a. Starting at the no-trade point A in Figure 3-3, show what would happen to production and consumption.
b. Which good is exported and which is imported?
c. Explain why the overall gains from trade are still positive.
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Related Book For
International Economics
ISBN: 978-1429278447
3rd edition
Authors: Robert C. Feenstra, Alan M. Taylor
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