Suppose France produces only two goods,airplanes and grapes.If France has a comparative advantage in grapes,a move toward free trade will

Question

Quizplus · Accepted Answer

If France has a comparative advantage in grapes, then it means that they can produce grapes at a lower opportunity cost than producing airplanes. This implies that if France specializes in producing grapes, they can export them and import airplanes, thereby consuming more of both goods than before. This will benefit grape workers, who will have increased employment opportunities and higher wages due to the increased demand for grapes. However, this will harm airplane workers, who will face competition from imported airplanes. Nonetheless, the overall benefits to the nation as a whole will outweigh the costs, as consumers will have access to cheaper airplanes and grapes, and the economy will become more efficient due to specialization. Therefore, choice D is the best option.

Suppose France Produces Only Two Goods,airplanes and Grapes