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Suppose that Vietnam is exporting food and importing clothing. Due to over-farming, the soil quality in Vietnam decreases, resulting in a reduction in agricultural productivity.

Suppose that Vietnam is exporting food and importing clothing. Due to over-farming, the soil quality in Vietnam decreases, resulting in a reduction in agricultural productivity. This causes a reduction in the amount of food that can be produced in Vietnam at any time, as well as an increase in the world price of food relative to clothing / . Using the production possibility frontier graph for Vietnam, shows how this can result in an overall reduction in welfare for Vietnam.

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