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

question 36

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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