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The degree of specialization predicted by the basic Ricardian model C} A. is nearly identical to that observed in the real world. C} B. is

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The degree of specialization predicted by the basic Ricardian model C} A. is nearly identical to that observed in the real world. C} B. is much more extreme than is observed in the real world. C} C. cannot be compared to the real wodd since the model is theoretical. C} D. is much less extreme than is observed in the real world. The figure to the right displays a scatterplot of hypothetical data for the US and the EU. More specifically, it compares the ratio of US to EU exports with the ratio Ratio of US/EU exports of US to EU labor productivity for 24 industries. 4 (The productivity ratio is measured on the horizontal axis, the export ratio on the vertical axis. And, both axes are given a logarithmic scale.) 2- Which of the following statements does the graph most accurately support? O A. The relationship between a country's exports and its relative productivity is tenuous. O B. A country's relative productivity will rise when its export ratio rises. .5- O C. Countries will tend to export those goods in which their relative productivity is high. .25 O D. Countries will tend to export those goods in which their absolute productivity is high. 0.5 1 2 8 Ratio of US/EU productivity

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