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Nation a Pays Lower Wages to Workers Than Nation B

Question 197

Multiple Choice

Nation A pays lower wages to workers than Nation B. Nation A also uses fewer capital goods per worker than Nation B. This suggests that gains from trade are likely to result if


A) Nation A produces products that are more capital-intensive and exports them to Nation B in return for products from Nation B that are more labor-intensive.
B) Nation A produces products that are more labor-intensive and exports them to Nation B in return for products from Nation B that are more capital-intensive.
C) Nation B produces products that are more labor-intensive and exports them to Nation A in return for products from Nation A that are more capital-intensive.
D) Nations A and B each produce capital-intensive and labor-intensive goods and trade them with each other.

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