As a result of trade between two countries which are of completely different economic sizes,specialization in the Ricardian 2X2 model tends to
A) be incomplete in both countries.
B) be complete in both countries.
C) be complete in the small country but incomplete in the large country.
D) be complete in the large country but incomplete in the small country.
E) sustain one countries economy in in direct proportion to the other.

Question

Quizplus · Accepted Answer

In the Ricardian model, the smaller country will completely specialize in the good for which it has a comparative advantage, while the larger country may not fully specialize due to its larger size and ability to produce both goods efficiently.

As a Result of Trade Between Two Countries Which Are