The Ricardian two- country,two- good model predicts that there are potential benefits from trade,but NOT
A)when one country has significantly lower wages than the other country.
B)when both countries have the same types of technology available.
C)the mechanism that determines which country will specialize in which good.
D)the effect of trade on income distribution.
E)when one country has an absolute advantage in the production of both goods.

Question

Quizplus · Accepted Answer

The Ricardian model does not address the effect of trade on income distribution within countries; it focuses on comparative advantage and specialization.

The Ricardian Two- Country,two- Good Model Predicts That There Are