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The Price Ratio of Two Internationally Traded Goods

Question 36

Multiple Choice

The price ratio of two internationally traded goods


A) is biased in favor of the country having an absolute advantage in the production of both goods.
B) is established by international law in favor of the less efficient country.
C) is such that only one country can benefit from trade.
D) is somewhere between the separate domestic cost ratios of the two goods.
E) fluctuates randomly and has little effect on the specialization of trade of the two goods.

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