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A) Outsourcing was not an issue when the factor-price-equalization theory was developed. Does the existence of outsourcing change the implications of the theory? Justify your

A) Outsourcing was not an issue when the factor-price-equalization theory was

developed. Does the existence of outsourcing change the implications of the

theory? Justify your answer with example. (13 marks)

B) We often hear that trade deficits are bad for a country. Do you agree or disagree

with this viewpoint? Explain (12 marks)

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