Assume the Standard Trade Model with Two Countries (Alpha and Beta)

question 48

Multiple Choice

Assume the standard trade model with two countries (Alpha and Beta) , two goods (food and drink) , and two factors of production (land and labor) . Further assume that Alpha is relatively labor-abundant and drink is relatively labor-intensive. Which of the following is most likely to happen in the short run following the opening of free trade between the countries?

• A)All the workers in both the countries will gain while all the land owners in both the countries will lose.
• B)All the workers in both countries will lose while all the land owners in both the countries will gain.
• C)The workers and land owners in the food industry in Beta will gain while the workers and the landowners in the drink industry will lose.
• D)The workers and the land owners in the food industry in Alpha will gain while the workers and the landowners in the drink industry will lose.

---

Definitions:

Guido Reni

An Italian painter of high-Baroque style, renowned for his graceful figures and religious as well as mythological themes.

Casino Rospigliosi

A historical building in Rome, Italy, known for housing important artworks, including frescoes by the artist Guido Reni.

Aurora

A natural light display in the Earth's sky, predominantly seen in high-latitude regions around the Arctic and Antarctic.

San Carlo alle Quattro Fontane

Describes a church in Rome, designed by the architect Francesco Borromini, celebrated for its complex Baroque architecture and undulating facade.