The two-country, multi-product model differs from the two-country, two-product model in that, in the former
A) the relative wage ratio will determine the pattern of trade ( which good is exported by which country).
B) which country will export which product is determined entirely by labor productivity data.
C) full specialization is likely to hold in equilibrium.
D) none of the goods are potentially nontraded.
E) domestic relative prices are not relevant.

Question

Quizplus · Accepted Answer

In a multi-product model, the relative wage ratio influences which goods are exported by each country, as it affects the comparative advantage across multiple products.

The Two-Country, Multi-Product Model Differs from the Two-Country, Two-Product Model