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Unformatted text preview: relative price of X is higher in the foreign than at home, and the two countries trade. (a) Assume that the home country cannot change its production. Show the increase in the home country’s welfare. What is this gain called? (b) Assume that the home country is able to move its resources from the production of one good to another. Show the increase in the home country’s welfare. Also, show the trade triangle....
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This note was uploaded on 10/24/2010 for the course ECON 460 taught by Professor Staff during the Fall '08 term at UNC.
- Fall '08
- International Economics