Assume that Country A is relatively abundant in labor and Country B is relatively abundant in land Note that wages are the returns to labor and rents are the returns to land According to the factor price equalization theorem, once Country A begins specializing according to comparative advantage and trading with Country B: A. wages and rents should fall in Country A B. wages and rents should rise in Country A C. wages should rise and rents should fall in Country A D. wages should fall and rents should raise in Country A ?

Related Mcqs:

According to the trade theory of Staffan Linder trade tends to be most pronounced in manufactured goods when trading countries have ?

A. similar endowments of natural resources B. similar levels of technology C. similar per-capita incomes D. similar wage levels...

Should international transportation costs decrease the effect on international trade would include a (an) ?

A. increase in the volume of trade B. Smaller gain from trade C. Decline in the income of home producers D. Decrease in the level of specialization in production...

The factor endowment model of international trade was developed by ?

A. Adam Smith B. David Ricardo C. John Stuart Mill D. Eli Heckscher and Bertil Ohlin...

According to the Heckscher-Ohlin model ?

A. everyone automatically gains from trade B. The gainers from trade outnumber the losers from trade C. The scarce factor necessarily gains from trade D. None of the above...

By adjusting the model of comparative advantage to include transportation costs along with production costs we would expect ?

A. The prices of trade goods to be lower than when there are no transportation costs B. specialization to stop when the production costs of the trading partners equalize C. The volume of trade to be less than when there are no transportation costs D. The gains from trade to be greater than when there … By adjusting the model of comparative advantage to include transportation costs along with production costs we would expect ?Read More...