The Ricardian Two-Country, Two-Good Model Predicts That There Are Potential

question 38

Multiple Choice

The Ricardian two-country, two-good model predicts that there are potential benefits from trade, but NOT

• A) when both countries have the same types of technology available.
• B) when one country has significantly lower wages than the other country.
• C) the mechanism that determines which country will specialize in which good.
• D) the effect of trade on income distribution.
• E) when one country has an absolute advantage in the production of both goods.

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Definitions:

Wholesalers

Companies that sell merchandise to other businesses rather than to the public.

Credit Terms

Terms for payment on account by the buyer to the seller.

Sales Discount

A reduction in the price of goods or services offered to customers, often to prompt early payment or bulk purchases.

Perpetual Inventory System

A system for managing inventory accounts that automatically updates the sale or purchase records using computerized point-of-sale technology and software for enterprise asset management.