Consider a world of two countries, Home and the rest of the world ROW, only one factor of production labour, and two goods X and Y. The productivities of a worker in the productions of X and Y in ROW are higher than the corresponding productivities of a worker in Home . Compared to a regime of autarky

Question

Consider a world of two countries, Home and the rest of the world ROW, only one factor of production labour, and two goods X and Y.   The productivities of a worker in  the productions of X and Y in ROW are higher than the corresponding productivities of a worker in Home . Compared to a regime of autarky

Answer

Free trade will raise the real wage of a worker in Home and in ROW but the real wage in Home remains higher than that in ROW

Answer

Free trade will raise the real wage of a worker in Home and in ROW but the real wage in Home remains lower than that in ROW

Answer

Free trade will raise the real wage of a worker in Home and in ROW by an equal amount

Answer

Free trade will equalize the real wage of a worker in Home and in ROW

Crowdly

Consider a world of two countries, Home and the rest of the world ROW, only one ...

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