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The Ricardian Two-Country Two-Good Model Predicts That There Are Potential

Question 7

Multiple Choice

The Ricardian two-country two-good model predicts that there are potential benefits from trade, but not


A) the effect of trade on income distribution.
B) the mechanism that determines which country will specialize in which good.
C) when one country has an absolute advantage in the production of both goods.
D) when one country has significantly lower wages than the other country.
E) when both countries have the same types of technology available.

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