In the three-country world in Question #19, which one of the following statements is TRUE?
A) Posttrade prices (terms of trade) of 1 wheat:2.5 clothing (or 1 clothing:0.4 wheat)Would give all the gains from trade to the United States.
B) Posttrade prices (terms of trade) of 1 wheat:3 clothing (or 1 clothing:? wheat) are Possible.
C) At posttrade prices (terms of trade) of 1 wheat:1.6 clothing (or 1 clothing:0.625 Wheat), England would export wheat and Spain and the United States would export clothing.
D) At posttrade prices (terms of trade) of 1 wheat:2.25 clothing (or 1 clothing:0.44 Wheat), Spain would export clothing and import wheat.

Question

Quizplus · Accepted Answer

At posttrade prices (terms of trade) of 1 wheat:1.6 clothing (or 1 clothing:0.625 Wheat), England would export wheat and Spain and the United States would export clothing. This is because England has a comparative advantage in producing wheat, while Spain and the United States have a comparative advantage in producing clothing. The posttrade prices reflect the relative strengths of each country's comparative advantage and allow for mutually beneficial trade to occur.

In the Three-Country World in Question #19, Which One of the Following