(A) Using the Neoclassical Production-Possibilities Frontier/indifference Curve Approach, Build the Case

Essay

(a) Using the neoclassical production-possibilities frontier/indifference curve approach, build the case that free trade is preferable to autarky for a country. Then explain how an economist could still say that trade can be beneficial to the country even if trade causes the community indifference curve map to change such that the country appears to lose welfare on the basis of the original autarky income distribution.
(b) It has often been pointed out in this course that, within a country, a movement to freer trade, while helping some people, can hurt other people. Thinking over various parts of this course, indicate two groups of people within a country who can have their well-being reduced because of the opening of the country to trade and very briefly explain why their welfare can be reduced.