Suppose Nation 1 has a comparative advantage in good X over Nation 2 and the two nations are currently engaged in equilibrium trade for good X.A decrease in the cost of producing good X in Nation 2 would cause the international price of good X to _______ and the quantity of good X traded to ______.
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
Correct Answer:
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