Intermediate Microeconomics and Its Application 12th Edition by Walter Nicholson,Christopher Snyder

تمرين 14

Figure shows that there are two sources of the utility gains from free trade:
(1) a consumption gain because consumers can consume combinations of goods that lie outside a nation's production possibility frontier, and
(2) a specialization effect because nations can specialize in producing goods with relatively high world rices. How would you show these effects in Figure? What would determine whether he effects were large or small?
U.S. farm subsidies reduce the world price of this crop from P* to P**. Exports rom this African country fall fromQS _QD to Q'S _ Q'D.