2. Suppose a small country produces product A and B with K and L. In free trade, it produces the quantities A0 and B0 as illustrated in Fig.1 by the two bold isoquants. We also know that it exports product B to the rest of the world.

(vi) What would be different if the country, instead of being small, was a large country with respect to the rest of the world? Explain.

K Bo Bo Ao L Figure 1 13