Question: Continue with the scenario of question 11-the new process in the United States and the resulting change in the international equilibrium price ratio. Focus now

Continue with the scenario of question 11-the new process in the United States and the resulting change in the international equilibrium price ratio. Focus now on effects in the rest of the world.
a. Show graphically and explain the effect on quantities produced, quantities consumed, and well-being in the rest of the world.
b. Explain as precisely as possible why well being changes in the rest of the world?

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a For the rest of the world the production possibility curve does not change but the equilibrium rel... View full answer

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