In the specific factors model,the effects of trade on welfare overall are ________ and for fixed factors used to produce the imported good they are ________.
A) positive; negative
B) positive; positive
C) negative; positive
D) ambiguous; positive
E) positive; ambiguous

Question

Quizplus · Accepted Answer

In the specific factors model, trade generally increases overall welfare due to gains from trade. However, fixed factors used to produce the imported good may experience a decrease in welfare due to increased competition and lower prices for their output.

In the Specific Factors Model,the Effects of Trade on Welfare