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Reference no: EM133132911

Use the standard trade model to predict changes to Home's terms of trade and welfare for the following scenarios: (Show changes to RS and RD and show changes in a diagram of Home's PPF). Home exports Cloth, Foreign exports Food. Cloth uses Labour intensively, Food uses Capital intensively.

(a) Home experiences growth in the size of its labour force at the same time that foreign experiences a reduction in its endowment of capital.

(b) Foreign places a tariff on the good that it imports.

Reference no: EM133132911

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