If One Country's Wage Level Is Very High Relative to the Other's

question 65

Multiple Choice

If one country's wage level is very high relative to the other's (the relative wage exceeding the relative productivity ratios) ,then if they both use the same currency

• A) neither country has a comparative advantage.
• B) only the low wage country has a comparative advantage.
• C) only the high wage country has a comparative advantage.
• D) consumers will still find trade worth while from their perspective.
• E) it is possible that both will enjoy the conventional gains from trade.

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