Suppose Labour in Mexico Is Less Productive Than Labour in Canada.What

question 58

Multiple Choice

Suppose labour in Mexico is less productive than labour in Canada.What can we conclude from this information

• A)that neither nation can benefit from trade
• B)that Mexico can benefit from trade, but Canada cannot
• C)that Mexico will not have a comparative advantage in any good
• D)that both nations can benefit from trade

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Definitions:

Cap

An upper limit set on the amount of money that can be charged or paid in a certain situation, such as interest rates on a loan or fees.

Cross-Hedging

Cross-hedging involves using a hedge to manage risk by investing in a financial instrument that is not directly correlated to the underlying asset but has similar price movements.

Hedge Price

A price locked in through hedge contracts to reduce exposure to price fluctuations of commodities, currencies, or securities.

Futures Contract

A formal, uniform agreement for purchasing or selling an item at a set price at a future date, commonly utilized for trading commodities or financial instruments.