Suppose That the Home Country in the Two­sector

question 102

Multiple Choice

Suppose that the Home country in the two­sector
(manufacturing and agriculture) specific­factors model
Has a comparative advantage in agricultural output.
What will happen to the return (rental) on capital when
Trade occurs?

• A)It will fall.
• B)It will rise.
• C)It will not change.
• D)It will first fall, then rise.

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