The Ricardian Two- Country,two- Good Model Predicts That There Are

question 24

Multiple Choice

The Ricardian two- country,two- good model predicts that there are potential benefits from trade,but NOT

• A)when one country has significantly lower wages than the other country.
• B)when both countries have the same types of technology available.
• C)the mechanism that determines which country will specialize in which good.
• D)the effect of trade on income distribution.
• E)when one country has an absolute advantage in the production of both goods.

---

Definitions:

Marginal Extraction Costs

The additional costs incurred in extracting one more unit of a resource, which can increase as the resource becomes more scarce.

User Costs

Expenses related to the use of a product or service, including maintenance, operation, and depreciation.

Property Rights

The legal rights to use, control, and dispose of property and resources.

Forest Cover

The proportion of land area covered by forests, which plays a critical role in carbon sequestration and biodiversity.