Suppose That the Home Country in the Two­sector

Multiple Choice

Suppose that the Home country in the two­sector
(manufacturing and agriculture) specific­factors model
Has a comparative advantage in manufactured output.
Will workers be better or worse off following the opening
Of trade with other countries?

A) Workers will be better off because the nominal wage increases.
B) Workers will be worse off because the nominal wage decreases.
C) Workers may be better off or worse off because the real wage in terms of the agricultural good rises and the
Real wage in terms of the manufactured good falls.
D) Workers may be better off or worse off because the real wage in terms of the agricultural good falls and the
Real wage in terms of the manufactured good rises.