It has been shown that the US has a comparative advantage in capital-intensive goods while China has a comparative advantage in labour-intensive goods. Suppose as a result of trade the US's economy is going to grow by 30% and that of China by 40%. Based on this information, which of the following statements is correct? a) The US has the stronger bargaining power in the determination of the relative price after trade. b) In the US, the employers are better off while the workers are worse off as a result of trade. c) Specialization means that China will produce all the capital-intensive goods. d) China has the stronger bargaining power in the determination of the relative price after trade
It has been shown that the US has a comparative advantage in capital-intensive goods while China has a comparative advantage in labour-intensive goods. Suppose as a result of trade the US's economy is going to grow by 30% and that of China by 40%. Based on this information, which of the following statements is correct? a) The US has the stronger bargaining power in the determination of the relative price after trade. b) In the US, the employers are better off while the workers are worse off as a result of trade. c) Specialization means that China will produce all the capital-intensive goods. d) China has the stronger bargaining power in the determination of the relative price after trade
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter15: International Trade And Finance
Section: Chapter Questions
Problem 6SQ
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It has been shown that the US has a comparative advantage in capital-intensive goods while China has a comparative advantage in labour-intensive goods. Suppose as a result of trade the US's economy is going to grow by 30% and that of China by 40%. Based on this information, which of the following statements is correct?
a) The US has the stronger bargaining power in the determination of the relative price after trade.
b) In the US, the employers are better off while the workers are worse off as a result of trade.
c) Specialization means that China will produce all the capital-intensive goods.
d) China has the stronger bargaining power in the determination of the relative price after trade.
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