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| In the same apple–computer trade example given in Section 19.5, suppose that because of technology transfer, the South becomes just as productive as the North at producing apples: one unit of southern labor can now produce 160 apples instead of 100. (a) Autarky: Redo Table 19.3 to reflect this change. Assume the other parameter values are unchanged. (b) Free trade: Do the same thing for Table 19.4. (c) Discuss the differences: How do the gains from trade change? Who benefits from the improvement in technology in the South? |
