Suppose there is an economy, called Saxet, that produces two goods: consumer goods and investment goods. The Saxes economy was producing the combination of output “C”

Suppose there is an economy, called Saxet, that produces two goods: consumer goods and investment goods. The Saxes economy was producing the combination of output “C”. It entered into a trade relationship with a second economy which had the comparative advantage in the production of investment goods. If both economies pursue the gains from trade, what will Saxet produce? Who in Saxet gain? Who in Saxet loses?

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