Suppose That, with Trade, the Price of Shoes (Which Are

question 19

Multiple Choice

Suppose that, with trade, the price of shoes (which are labor intensive) increases by 10%. Then which of the following can you say for sure about returns to labor and capital in the country?

• A) Wages will rise by more than 10%.
• B) Rental rates will rise by more than 10%.
• C) Wages will rise by no more than 10%.
• D) Rental rates will fall by at least 10%.

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