David lee 10 15 20 us 40 0 0 40 us 25 15 imports

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Unformatted text preview: offee 15 (imports) 25 U.S. +5 +5 Brazil n.c. +5 World +5 + 10 AEM/ECON 2300 14 of Lecture 3 So, allowing specialization and trade yields: ⇒ Positive “gains from trade” in both countries ⇒ Higher social welfare (e.g., utility) in both countries Prof. David Lee AEM/ECON 2300 15 of Lecture 3 Decreasing Marginal Costs and Total Specialization M X B A PPF C Prof. David Lee AEM/ECON 2300 16 of Lecture 3 Decreasing marginal costs most likely to occur in industries with ______________ ? Prof. David Lee AEM/ECON 2300 17 of Lecture 3 Decreasing marginal costs most likely to occur in industries with significant economies of scale – Example: Prof. David Lee AEM/ECON 2300 18 of Lecture 3 Decreasing marginal costs most likely to occur in industries with significant economies of scale – Example: Utilities industry (elec...
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