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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.


Definitions:

Federal Income Tax

The tax levied by the IRS on the annual earnings of individuals, corporations, trusts, and other legal entities.

Form 941

A tax form filed by employers in the United States to report withholding taxes, Social Security, and Medicare taxes.

Social Security

A government program that provides financial assistance to people with an inadequate or no income.

Medicare Taxes

Federal taxes collected from earnings to fund the Medicare program, which provides healthcare benefits to senior citizens.

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