Question
Scenario 1-1 Assume that Leinster is a labor-abundant country and Saxony is a land-abundant country. In addition, telephones are labor-intensive goods and bread is a
Scenario 1-1
Assume that Leinster is a labor-abundant country and Saxony is a land-abundant country. In addition, telephones are labor-intensive goods and bread is a land-intensive good. Free trade prevails between the two countries.
Refer to Scenario 1-1. What happens to the price of bread in Leinster and Saxony upon opening to trade?
Group of answer choices
a)The price of bread rises in Leinster and falls in Saxony when trade opens up.
b)The price of bread rises in Leinster and rises in Saxony when trade opens up.
c)The price of bread falls in Leinster and falls in Saxony when trade opens up
d)The price of bread falls in Leinster and rises in Saxony when trade opens up.
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Introductory Econometrics A Modern Approach
Authors: Jeffrey Wooldridge
7th Edition
1337558869, 978-1337558860
