Suppose That Two Countries, a and B, Employ the Same

question 16

Essay

Suppose that two countries, A and B, employ the same technology in the production of a good. External economies of scale apply in both countries. Analyze the effects of trade on long-run production levels if country A has a comparatively lower cost of production when trade begins.

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Definitions:

Genetics

The scientific study of genes, heredity, and the variation of organisms, explaining how traits are passed from parents to offspring.

Income Influence

The impact of an individual's or household's income level on their opportunities, lifestyle, and choices.

Social Capital

Refers to the networks or connections that individuals possess.

Network Capital

The valuable resources a person can access through their social networks, including support, information, and opportunities.