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Nation a Pays Lower Wages to Workers Than Nation B

Question 2

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 produces capital-intensive and labor-intensive goods and trades them with each other.

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