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