Recall from the lectures that the first fundamental welfare theorem states that equilibrium in competitive markets is Pareto Optimal. The second fundamental welfare theorem states that any Pareto efficient allocation can be achieve by the competitive equilibrium with the appropriate redistribution of initial endowments.

Now consider a situation of a small country that is considering opening to international trade. You are the leader of this country and your economists are telling you that if you open up to international trade, the natural resource sector will gain over a billion dollars in annual revenue. However, your economists are also telling you that the manufacturing sector will lose half a billion in revenue.

With what you have learned so far in this course and in the economics program, what decision would you make? Make sure to make some reference to competitive markets and logic expressed in the first and second welfare theorem.

Homework: HW4: Chapter 3 om Score: 0 of 1 pt 9 of 25 (15 complete) Intil y 3.3.9 For the following problem, do not include a graph. (a) For the parabola y = 2x* + 3x + 1, find the vertex. (b) Does the vertex correspond to the highest point or the lowest point on the graph? orke (a) The vertex is (Simplify your answer. Type an ordered pair.) It Scq its: stion stion ition