Suppose That the Home Country in the Two-Sector (Manufacturing and Agriculture)

question 56

Multiple Choice

Suppose that the home country in the two-sector (manufacturing and agriculture) specific-factors model has a comparative advantage in manufactured output. What will happen to the amount of capital used in manufacturing production when trade occurs?

• A) It will fall.
• B) It will rise.
• C) It will not change.
• D) It will first fall, then rise.

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Definitions:

Demand Creation

A marketing strategy aimed at generating new desire or interest in a product or service, rather than catering to existing demand.

Strategic Model

A framework or plan of action designed to achieve a particular goal or set of objectives, often used in business or military contexts.

Policies

Principles or rules created to guide decisions and achieve rational outcomes.

Future Plans

Intentions or strategies devised for achieving specific future goals.