The flat part of Home's export supply curve in the Ricardian model is due to the assumption that:
A) Home has a comparative advantage in its export.
B) Home has an absolute advantage in its export.
C) the marginal product of labor is constant in the export good.
D) Home has more labor than Foreign.

Question

Quizplus · Accepted Answer

The flat part of Home's export supply curve in the Ricardian model is due to the assumption that the marginal product of labor is constant in the export good. This means that as Home produces more of the export good, the same amount of labor can produce the same amount of output, leading to a constant marginal cost of production and a flat supply curve. Choices A, B, and D are not correct because they do not explain why the supply curve is flat.

The Flat Part of Home's Export Supply Curve in the Ricardian