Multiple Choice
Chile and the United States use capital and labor to produce wheat and automobiles. The United States is capital abundant, and Chile is labor abundant. Wheat production is more labor intensive than automobile production. What is the most important reason why U.S. workers might oppose United States-Chile free trade?
A) Returns to capital in the United States are expected to rise as a result of United States-Chile free trade.
B) Wages in the United States are expected to rise as a result of United States-Chile free trade.
C) Returns to capital in Chile are expected to rise as a result of United States-Chile free trade.
D) Wages in the United States are expected to fall as a result of United States-Chile free trade.
Correct Answer:
Verified
Correct Answer:
Verified
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