The Price Ratio of Two Internationally Traded Goods

question 28

Multiple Choice

The price ratio of two internationally traded goods

• A) is biased in favor of the country having an absolute advantage in the production of both goods.
• B) is established by international law in favor of the less efficient country.
• C) is such that only one country can benefit from trade.
• D) is somewhere between the separate domestic cost ratios of the two goods.
• E) fluctuates randomly and has little effect on the specialization of trade of the two goods.

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