The following input-requirements data are for Country A, a capital-abundant country that produces nothing but bread and wine using only capital and labor as inputs. 1 Pound of Bread1 Gallon of WineCapital Input5 units2 unitsLabor Input4 units1 unit Which of the following is most likely to happen if Country A engages in free trade with other countries?
A. The prices of both bread and wine will fall in the domestic market.
B. The price of bread will rise but the price of wine will fall in the domestic market.
C. The price of bread will fall but the price of wine will rise in the domestic market.
D. The prices of both bread and wine will rise in the domestic market.
Answer: C
You might also like to view...
A corrective subsidy induces the ________ to the socially optimal level
A) consumers of a negative externality to increase the quantity consumed B) producers of a negative externality to increase the quantity produced C) consumers of a positive externality to increase the quantity consumed D) producers of a positive externality to reduce the quantity produced
Jake can complete an oil change in 45 minutes and he can write a poem in 90 minutes. Ming-la can complete an oil change in 30 minutes and she can write a poem in 90 minutes. Jake's opportunity cost of writing a poem is lower than Ming-la's opportunity cost of writing a poem
a. True b. False Indicate whether the statement is true or false