Assume the Standard Trade Model with Two Countries (Alpha and Beta)

Multiple Choice

Assume the standard trade model with two countries (Alpha and Beta) , two goods (food and drink) , and two factors of production (land and labor) . Further assume that Alpha is relatively labor-abundant and drink is relatively labor-intensive. If the countries engage in free trade, the price of food will:

A) rise in Alpha and fall in Beta.
B) rise in both the countries.
C) fall in both the countries.
D) fall in Alpha and rise in Beta.