Is it always true that trade increases the welfare of a nation? Under what circumstances would the concentration of industries in one country leave another country worse off when trade resumes between them? Explain with an example step by step by using the relevant graphs. How is "protection can be a legitimate policy under this condition? CHAPTER 7. External Economics of Scale and the International Location of Production Price cost per button FIGURE 7-4 The Importance of Established Advantage The average cost curve for Vietnam, AC lies below the average cost curve for China, Ao Thus Vietnam could potentially supply the world market more cheaply than China If the Chinese industry gets established first however, it may be able to sell buttons at the price which is below the cost that an individual Vietnamese firm would face began production on its own 50 a pattern of specialization established by historical accident may persist even when new producers could potentially love lower costs P -Alonu ACHE DORLD Q, Ouantity of buttons produced and demanded HOLDING THE WORLD TOGETHER Is it always true that trade increases the welfare of a nation? Under what circumstances would the concentration of industries in one country leave another country worse off when trade resumes between them? Explain with an example step by step by using the relevant graphs. How is "protection can be a legitimate policy under this condition? CHAPTER 7. External Economics of Scale and the International Location of Production Price cost per button FIGURE 7-4 The Importance of Established Advantage The average cost curve for Vietnam, AC lies below the average cost curve for China, Ao Thus Vietnam could potentially supply the world market more cheaply than China If the Chinese industry gets established first however, it may be able to sell buttons at the price which is below the cost that an individual Vietnamese firm would face began production on its own 50 a pattern of specialization established by historical accident may persist even when new producers could potentially love lower costs P -Alonu ACHE DORLD Q, Ouantity of buttons produced and demanded HOLDING THE WORLD TOGETHER