Consider a Two-Country Two-Good Model Where Labor Is the Only

Multiple Choice

Consider a two-country two-good model where labor is the only factor of production. Each country faces an increasing-cost production-possibility curve. In this model the amounts of both goods that are produced in a country in no-trade situation are determined by:

A) the relative prices of the goods.
B) the factor endowments in the economy.
C) technology differences between the industries.
D) the aggregate demand in the economy.