In the Specific Factors Model,the Effects of Trade on Welfare

question 66

Multiple Choice

In the specific factors model,the effects of trade on welfare overall are ________ and for fixed factors used to produce the exported good they are ________.

• A) positive; positive
• B) negative; positive
• C) positive; negative
• D) ambiguous; positive
• E) positive; ambiguous

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Definitions:

Consumer's Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay.

Earplugs

Devices inserted in the ear canal to protect the ears from loud noises, water, foreign bodies, or excessive wind.

Utility Function

A mathematical representation that ranks an individual's preferences over a set of goods or outcomes.

Equivalent Variation

A measure in economics that calculates the change in income required to reach the utility level before a price change, keeping the new prices constant.