10. The Ricardian model of comparative advantage lends support to the argument thatA) trade tends to worsen the conditions of unskilled labor in rich countries.B) trade tends to worsen the conditions of owners of capital in rich countries.C) trade tends to worsen the conditions of workers in poor countries.D) trade tends to worsen the conditions of workers in rich countries.E) trade is mutually beneficial to the countries that engage in it.
Question
- The Ricardian model of comparative advantage lends support to the argument thatA) trade tends to worsen the conditions of unskilled labor in rich countries.B) trade tends to worsen the conditions of owners of capital in rich countries.C) trade tends to worsen the conditions of workers in poor countries.D) trade tends to worsen the conditions of workers in rich countries.E) trade is mutually beneficial to the countries that engage in it.
Solution
The correct answer is E) trade is mutually beneficial to the countries that engage in it.
The Ricardian model of comparative advantage suggests that international trade is a positive-sum game, in which all parties can benefit. This is because it allows countries to specialize in the production of goods and services that they can produce most efficiently, and then trade for goods and services that other countries can produce more efficiently. This increases the overall wealth and living standards in all countries involved in the trade.
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In the Ricardian model, one of the countries does not gain from trade, while another enjoys gains from trade when Countries have similar technologies Correct Answer One country is much larger than another Countries have different technologies and are of comparable size You Answered One country has comparative advantage in production of both goods
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