In what way does the specific-factors model add to the conclusions of the Ricardian model?
A) In the Ricardian model, only labor is better off with free trade. In the specific-factors model, all resources (labor, land, and capital) are better off with free trade.
B) In the Ricardian model, a country is better off with free trade. In the specific-factors model, some of a country's resources will be worse off with free trade.
C) In the Ricardian model, some of a country's resources will be worse off with free trade. In the specific-factors model, some of a country's resources will be better off with free trade.
D) In the Ricardian model, labor will be worse off with free trade. In the specific-factors model, labor will be better off with free trade.

Question

Quizplus · Accepted Answer

The specific-factors model adds to the Ricardian model by acknowledging that while a country as a whole benefits from free trade, not all resources within the country benefit equally. Some resources may actually be worse off due to the reallocation of resources towards more efficient industries, which is a nuance not addressed by the simpler Ricardian model that focuses on overall national benefit from trade.

In What Way Does the Specific-Factors Model Add to the Conclusions