Consider a situation similar to that in Figure 7-3, in which two countries that can produce a

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Consider a situation similar to that in Figure 7-3, in which two countries that can produce a good are subject to forward-falling supply curves. In this case, however, suppose the two countries have the same costs, so that their supply curves are identical.

a. What would you expect to be the pattern of international specialization and trade? What would determine who produces the good?

b. What are the benefits of international trade in this case? Do they accrue only to the country that gets the industry?

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