When Poland Entered the European Union -Where There Is Free

question 16

Multiple Choice

When Poland entered the European Union -where there is free movement of labor across member countries -some of the abundant Polish plumbers migrated to the United Kingdom to fill the shortage there. The net result was that wages for plumbers in the U.K. stabilized or softened and wage rates for plumbers in Poland increased. As the U.K. consumer of plumbing services benefited from this development, one could argue that the real income of the British consumer was, therefore, enhanced. This is an example of the _____.

• A) factor-price equalization theory
• B) diamond theory
• C) trade policy theory
• D) managed trade theory
• E) trade deficit theory

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