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The Ricardian model of international trade demonstrates that trade can be mutually beneficial. Why, then, do governments restrict imports of some goods? Use the specific factor model to answer this question.
China is relatively abundant in labor, while Canada is relatively abundant in capital. In both countries the production of shirts is relatively more labor intensive than the production of computers. According to the factor endowment theory, what country will have a comparative advantage in the production of shirts? Computers? Wat pattern of trade can be predicted? How will the internal distribution of national income in each country be affected after trade?