Bulgaria recently joined the European Union (EU) and faces intense import competition from other EU members, such as Greece. Suppose you have the following data on labor productivity for paper and corn production in Bulgaria and Greece. Assume that paper and corn production are measured in constant dollars reflecting the value of the products.

Use the Ricardian model to analyze possible effects on each country's paper and corn industries when answering the questions that follow.

Country

Sales per Employee

Paper

Corn

(Dollars per year)

(Dollars per year)

Bulgaria52,00026,000Greece78,00031,200

The table suggests that Greece has an absolute advantage over Bulgaria inboth products and a comparative advantage in .

The table suggests that wages in Greece are in Bulgaria.

As a result of Bulgaria's joining the EU, employment in Bulgaria is likely to fall in .

True or False: The degree of openness of the Bulgarian economy will have a positive impact on the level of employment.

True

False