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Assume a two-country, two-product model where the countries are A and B and the products are Y and Z. In the free trade equilibrium, the
Assume a two-country, two-product model where the countries are A and B and the products are Y and Z. In the free trade equilibrium, the international price of good Z is less than the no-trade price of good Z would be in country A. Explain why, for country A, Ricardo's comparative advantage model predicts full specialization, while the Heckscher-Ohlin model predicts only partial specialization of two goods
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