Assume a nation where labor is mobile between industries but capital is not.The specific-factors model states that trade leads to which of the following?
A) An increase in the return to capital used to produce the nation's export commodity
B) An increase in the return to capital used in the nation's import-competing industry
C) A decrease in the return to capital used to produce the nation's export commodity
D) An increase in the return to labor used in the production of both imports and exports.
Correct Answer:
Verified
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