In the Ricardian Model, If a Country's Trade Is Restricted

question 39

Multiple Choice

In the Ricardian model, if a country's trade is restricted, this will cause all except which?

• A) limited specialization and the division of labor
• B) reduced volume of trade and reduced gains from trade
• C) nations to produce inside their production possibilities curves
• D) a country to produce some of the product of its comparative disadvantage
• E) raised costs as more diverse product is produced internally

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Definitions:

Resources

Assets, materials, and inputs used to produce goods and services.

Input Market

The market where resources or inputs such as labor, materials, and capital are bought and sold, allowing businesses to produce goods and services.

Households

Entities consisting of one person or a group of people who share living accommodations and make joint or separate decisions in consumption and investment.

Normal Good

A Normal Good is a type of good for which demand increases when the income of the consumer increases and falls when the income decreases, assuming the price remains constant.