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Consider the Specific-Factor model, Capital is specific to the automobile sector while Land is specific to the rice sector. Workers can move freely across sectors.

Consider the Specific-Factor model, Capital is specific to the automobile sector while Land is specific to the rice sector. Workers can move freely across sectors. Let us say that the relative price of rice in India is lower than in the US and these are the only two countries that trade rice and automobiles.

 Draw the PPF for the US in the neoclassical framework and the trade triangle to show imports and exports. 

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