Q
By adjusting the model of comparative advantage to include transportation costs along with production costs we would expect ?
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A
A. The prices of trade goods to be lower than when there are no transportation costs
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B
B. Specialization to stop when the production costs of the trading partners equalize
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C
C. The volume of trade to be less than when there are no transportation costs
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D
D. The gains from trade to be greater than when there are no transportation costs
Correct Answer:
C. C. The volume of trade to be less than when there are no transportation costs
