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Econ452 Learning unit 12 - part 1 - 2021 spring
1) The document discusses external economies of scale and how they can lead to increasing returns and changing patterns of international trade. 2) External economies occur when costs decrease as the size of an entire industry increases, rather than for individual firms. They arise from factors like specialized suppliers and labor pooling. 3) Models with external economies show countries specializing based on historical accidents rather than comparative advantage. Trade allows concentrating production where costs are lowest.
