Question: 4. [10 marks]. Consider a specific factors model with two goods, X and Y. Suppose two countries have identical production possibilities curves (and identical supplies

4. [10 marks]. Consider a specific factors model with two goods, X and Y. Suppose

two countries have identical production possibilities curves (and identical

supplies of all factors), but that Home consumers have a stronger preference for

good X, and Foreign consumers have a stronger preference for good Y. In which

good will Home have a comparative advantage? Why?

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