It can be shown that differences in "beforetrade" relative prices will
Determine:
A)which nation has the absolute advantage.
B)which good each nation will export or import.
C)the quantity traded by each nation.
D)which nation has the comparative advantage.

Question

It can be shown that differences in "before­trade" relative prices will
Determine:
A)which nation has the absolute advantage.
B)which good each nation will export or import.
C)the quantity traded by each nation.
D)which nation has the comparative advantage.

Quizplus · Accepted Answer

Differences in "before-trade" relative prices indicate which goods are cheaper or more expensive in each nation, thus determining which goods each nation will export or import based on comparative advantage.

It Can Be Shown That Differences in "Before­trade" Relative Prices

It Can Be Shown That Differences in "Beforetrade" Relative Prices