Multiple Choice
Suppose that the home country in the two-sector (manufacturing and agriculture) specific-factors model has a comparative advantage in manufactured output. Which statement below best describes changes in returns on capital and land after trade occurs?
A) The return on capital and land will both rise.
B) The return on capital and land will both fall.
C) The return on capital will rise and the return on land will fall.
D) The return on capital will fall and the return on land will rise.
Correct Answer:
Verified
Correct Answer:
Verified
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