Consider trade between country A and country B.If country A has wages that are substantially less than those in country B,

Question

Quizplus · Accepted Answer

The pattern of comparative advantage depends not only on the difference in wages but also on the relative productivities of labor in the two countries. Therefore, it is possible that country B may still have a comparative advantage in producing certain goods despite higher wages, and trade between the two countries can be mutually beneficial. Choices A, B, C, and E are incorrect because they either assume absolute advantage or do not apply to the given scenario.

Consider Trade Between Country a and Country B