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

question 37

Multiple Choice

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

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

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Definitions:

Good Faith Purchaser

An individual who buys property without knowledge of any existing claims or defects in the title of the property, thereby acquiring uncontested ownership.

Bulk Transfer

The transfer of a substantial part of the materials, inventory, or supplies of a business outside the ordinary course of business.

Ordinary Course of Business

The regular, usual, and customary activities and operations that a company engages in to conduct its business.

Consignment

The process of handing over goods to another party to sell on behalf of the owner, yet ownership remains with the original party until the goods are sold.