The Duguay family lives on the east side of Shediac Bay, and the Legault family lives on

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The Duguay family lives on the east side of Shediac Bay, and the Legault family lives on the west side. Each family’s diet consists of lobster and potatoes, and each is self-sufficient, trapping their own lobsters and growing their own potatoes. Explain the conditions under which each of the following would be true.

a. The two families are made better off when the Duguays specialize in trapping lobsters, the Legaults specialize in growing potatoes, and the two families trade.

b. The two families are made better off when the Legaults specialize in trapping lobsters, the Duguays specialize in growing potatoes, and the two families trade.

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Macroeconomics

ISBN: 978-1319120054

3rd Canadian edition

Authors: Paul Krugman, Robin Wells, Iris Au, Jack Parkinson

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