Suppose that labor is mobile between sectors but that capital and land are specific. Then labor will tend to benefit from trade when:
a. it spends a large amount of its income on the imported good.
b. it spends a large amount of its income on the exported good.
c. wages do not change much in percentage terms.
d. all of these occur.
Answer: a. it spends a large amount of its income on the imported good.
You might also like to view...
The figure above shows that at the unregulated market equilibrium, marginal social benefit ________ marginal cost, and the number of students enrolled is ________
A) exceeds; above the efficient quantity B) exceeds; below the efficient quantity C) is below; above the efficient quantity D) is below; below the efficient quantity E) equals; efficient
Government debt places a burden on future generations if
A) the debt is used to fund the current consumption of its citizens. B) the debt is used to fund the production of investment goods. C) the debt is used to fund schools and highways. D) All of the above are correct.