Suppose that two countries A and B start to trade together. Country A specialises in the production of good X and country B specialises in the production of good Y (meaning A exports good X, while B exports good Y).
Everything else being equal (in particular, there is no gain in productivity and no labour mobility), we can observe in country B:

Question

Suppose that two countries A and B start to trade together. Country A specialises in the production of good X and country B specialises in the production of good Y (meaning A exports good X, while B exports good Y).

Everything else being equal (in particular, there is no gain in productivity and no labour mobility), we can observe in country B:

Answer

lower wages and higher employment in the sector producing Y

Answer

higher wages and lower employment in the sector producing X

Answer

lower wages and lower employment in the sector producing X

Answer

higher wages and higher employment in the sector producing Y

Answer

I don't know

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Suppose that two countries A and B start to trade together. Country A specialise...

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