Assume That Transportation Costs Are Especially High for Widgets in the Two-Country

question 20

Multiple Choice

Assume that transportation costs are especially high for Widgets in the two-country, two-product Ricardian model, and Country A enjoys a comparative advantage in Widgets, then

• A) country B must also enjoy a comparative advantage in Widgets.
• B) country B may end up exporting Widgets.
• C) country A may switch to having a comparative advantage in the other good.
• D) country A will still export Widgets.
• E) trade may be impossible between the two countries.