Assume that Honduras has a comparative advantage in producing bananas and exports bananas to Brazil. We can conclude that

A) Honduras has a lower opportunity cost of producing bananas relative to Brazil.
B) Brazil has an absolute disadvantage in producing bananas relative to Honduras.
C) Labor costs are higher for banana producers in Brazil than in Honduras.
D) Honduras also has an absolute advantage in producing bananas relative to Brazil.

A

Economics

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When exchange rates change and prices stay the same:

a. relative prices of traded goods in the two nations are unchanged. b. the price of foreign goods expressed in the home currency will always rise. c. imports get more expensive as the home currency depreciates. d. the price of foreign goods expressed in the home currency will always fall.

Economics

The assumption of increasing opportunity costs in the HO model increases the likelihood that

A) there will be incomplete specialization in production after trade begins. B) countries will be better off with free international trade. C) countries will maximize their standards of living from free international trade. D) All of the above.

Economics