We have focused on the case of trade involving only two countries. Suppose that there are many countries capable of producing two goods, and that each country has only one factor of production, labor. What could we say about the pattern of production and trade in this case? (Hint: Try constructing the world relative supply curve.)
Added by Hunter G.
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This is determined by the relative productivity of labor in each country. Second, the world relative supply curve would be upward sloping. This is because as the relative price of one good increases, more countries would find it profitable to specialize in the Show more…
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