Analyze the pattern and gains from trade

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Reference no: EM1375132

Assume two nations that each manufacture two goods X and Y defined as follows.

HOME FOREIGN
X= αLx α=10 X= αLx α=5
Y=βLy β=10 Y=βLy β=10
LH=10 LF=10

Assume that the home country experiences technological growth in X sector such that α rise to 12. Describe the impact on the free trade price, the pattern of trade and gains from trade.

Reference no: EM1375132

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