Exhibit 29-2 -Suppose the Pretrade Relative Price of Two Goods in Country

question 70

Multiple Choice

Exhibit 29-2
-Suppose the pretrade relative price of two goods in country X is 2 and the pretrade relative price of two goods in country Y is 4. The posttrade relative price will settle somewhere between 2 and 4 depending on

• A)the level of wages in the two countries.
• B)the level of demand in the two countries.
• C)the opportunity cost of production in the two countries.
• D)the level of labor productivity in the two countries.
• E)which country has the absolute advantage.

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