Assume a Nation Where Labor Is Mobile Between Industries but Capital

question 43

Multiple Choice

Assume a nation where labor is mobile between industries but capital is not.The specific-factors model states that trade leads to which of the following?

• A)An increase in the return to capital used to produce the nation's export commodity
• B)An increase in the return to capital used in the nation's import-competing industry
• C)A decrease in the return to capital used to produce the nation's export commodity
• D)An increase in the return to labor used in the production of both imports and exports.

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