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Q. |
In the Ricardian model, when two countries trade freely, the relative price of the goods they are trading is determined by: |
A. | Relative demand and relative supply for each trading country. |
B. | Relative demand and relative supply on the world market. |
C. | Relative opportunity costs in the two countries. |
D. | Relative wages. |
Answer» B. Relative demand and relative supply on the world market. |
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