If one country's wage level is very high relative to the other's (the relative wage exceeding the relative productivity ratios) then it is probable that
A) free trade will not improve either both countries welfare.
B) free trade will result in no trade taking place.
C) free trade will result in each country exporting the good in which it enjoys comparative advantage.
D) free trade will result in each country exporting the good in which it suffers the greatest comparative disadvantage.
E) free trade will not affect the economic welfare of either country.
C
You might also like to view...
Economics is best defined as the social science that studies
A) how a person can get everything he or she wants. B) how choices made in the social interest must conflict with choices made in the self-interest. C) the way to eliminate choices in our decisions. D) the choices that societies, and the people and institutions that make up societies, make in dealing with the issue of scarcity. E) the reason money exists.
Producer surplus is the:
a. amount by which the quantity supplied of a good exceeds the quantity demanded of a good. b. measure of producers' willingness to sell a good plus the price of the good. c. measure of how much producers value a good. d. amount consumers actually pay for a good minus the amount the sellers are willing to sell the good.