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In the Specific Factors model, two goods, Books and Pianos, are produced using machines and labor. Machines cannot move between the industries but workers are
In the Specific Factors model, two goods, Books and Pianos, are produced using machines and labor. Machines cannot move between the industries but workers are mobile. Suppose that Canada has a comparative advantage in Books. Will Canadian workers be better off or worse off following opening to trade? A) Workers will be better off because the real wage in terms of both goods rises. B) Workers may be better off or worse off because the real wage in terms of Piano falls and the real wage in terms of Books rises. C) Workers may be better off or worse off because the real wage in terms of Pianos rises and the real wage in terms of Books fall. D) Workers will be better off because the nominal wage increases. E) Workers will be worse off because the nominal wage decreases F) Workers who prefer to consume books will be better off
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