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Answer to Question #61793 in Microeconomics for Yavonna
Question #61793
(b) Initially, both Australia and the US spent half a day producing ethanol and half a day producing wheat. However, they now decide to specialise in producing the product that they have a comparative advantage and trade their products in the world market. What are the total gains from trade?
Expert's answer
The overall world trade is going to win from the situation, since both countries are going to produce the competitive goods in the maximum amount.
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