Question
When Australia has a closed economy for flowers, a bouquet of flowers sells for $50. Assuming Australia does not have the comparative advantage (CA) in
When Australia has a closed economy for flowers, a bouquet of flowers sells for $50. Assuming Australia does not have the comparative advantage (CA) in the production of flowers, the opening up the flowers market in Australia to international trade will result in Australian producers being better off as the price of flowers will exceed $50. Correct this statement and provide for a brief example proving your case.
Just need to state that with no CA, international trade will lower prices and that pressurises less efficient domestic producers-explain with a brief example.
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