Assume Spain determines that it has a comparative advantage in wool and begins to export wool to Portugal. In turn, Portugal finds it has a comparative advantage in wine and begins to export wine to Spain. Who are the likely winners and losers in the short run as a result of this specialization?
A) everyone in both countries will gain from free trade.
B) the winners are producers of wool in Spain, producers of wine in Portugal, and consumers in both countries; the losers are producers of wine in Spain and producers of wool in Portugal.
C) the winners are consumers in both countries and producers in both countries; the losers are the workers in both countries.
D) the winners are producers of wool in Portugal, producers of wine in Spain, and consumers in both countries; the losers are producers of wine in Portugal and producers of wool in Spain.
Correct Answer:
Verified
Q41: Q42: What does the phrase, "terms of trade" Q43: Q44: Q45: Q46: The assumption that a country engages in Q47: The classic story of comparative advantage demonstrates Q48: The neoclassical theory of comparative advantage (the Q49: The criticism that both the Heckscher-Ohlin model Q50: In the mid 1960s, Raymond Vernon developed
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents