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Wages are higher in England than in the United States. If the countries decide to trade,...

Wages are higher in England than in the United States. If the countries decide to trade, then who will benefit?


1. Neither country can benefit unless one knows the product that is traded.


2. Both countries can benefit regardless of the products traded.

3. Only the country that can produce the product more efficiently will benefit.

4. Only the country that can produce the product at a lower opportunity cost will benefit.

5. Both countries will benefit, but only if a trade agreement for specific products is made by their respective governments.

Thinking 4.

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Answer #1

Answer.) 5. Both countries will benefit, but only if a trade agreement for specific products is made by their respective governments.

Since wages are higher in England, England would benefit from a trade agreement in which England gets an advantage in producing capital-intensive goods more efficiently than the united states.By this agreement, England would be exporting more Capital intensive goods to the U.S. and U.S. would be exporting more labor-intensive goods to England.

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