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Ricardian model and Specific factor model related True or False questions, please explain why briefly. 1....

Ricardian model and Specific factor model related True or False questions, please explain why briefly.

1. The fact that workers in poor US trading partners earn less than workers in the US is a proof that trade does not benefit the poor in the developing questions.

2. As long as China has lower wages than the US, the textile industry in the US cannot compete with Chinese imports.

3. Since China's productivity is increasing over time and wages in China are low, the US will eventually be unable to compete with China on any products.

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Answer #1

a) "False"

The wages might be low it doesn't mean that the trade is not helping, trade will help equalise the wages in the market, it might be low because if labor abundance but the return for labor with trade will rise.

b) "False"

IT can if they increase the productivity i.e. higher output per worker can beat the low wages in the foreign nation and make US an exporter of these goods.

c) "False"

Even after that US will have comparative advantage in doing something, China can't beat the US in all the sectors.

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