If Australia has relatively more land per worker, and Belgium has relatively mor
ID: 1225859 • Letter: I
Question
If Australia has relatively more land per worker, and Belgium has relatively more capital per worker, then if trade began between these two countries,
A) the relative price of the land-intensive product would increase in Australia.
B) the relative price of the capital-intensive product would increase in Australia.
C) the relative price of the land-intensive product would increase in Belgium.
D) the relative price of the capital-intensive product would decrease in Belgium.
E) relative product prices would diverge between Australia and Belgium.
Explanation / Answer
Answer) A) the relative price of the land-intensive product would increase in Australia.