Consider again Figure 2.3, which shows free trade in motorbikes. Assume that U.S. productivity in producing motorcycles increases.

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QUESTION:

Consider again Figure 2.3, which shows free trade in motorbikes. Assume that U.S. productivity in producing motorcycles increases. What is the effect on the U.S. domestic demand and/or supply curve(s)? What is the effect on the U.S. demand-for-imports curve? What is the effect on the equilibrium international price?


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