-Refer to above figure. Albania refused to engage in international trade for ideological reasons. To maximize its economic welfare it would choose to produce at which point in the diagram above?
Suppose the PA/PB at point a was equal to 1. Given this information, in which good (A or
B) does Albania enjoy a comparative advantage?
Now that the Cold War is over, Albania is interested in obtaining economic welfare gains from trade. The relevant international relative price is PA/PB = 2. Albania would therefore choose to produce at which point (a, b, or c)? Given this additional information, in which good does Albania enjoy a comparative advantage?
Definitions:
High Tax Rates
Elevated levies imposed by a government on the income or profit of individuals and businesses, which can affect investment decisions and economic growth.
Leasing
An arrangement where one party, the lessor, grants the other party, the lessee, the right to use an asset for a specified period in exchange for periodic payments.
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