In the Ricardian model, if a country's trade is restricted, this ...

[karateprodigy]

In the Ricardian model, if a country's trade is restricted, this will cause all EXCEPT which?
 
  A) limited specialization and the division of labor
  B) reduced volume of trade and reduced gains from trade
  C) nations to produce inside their production possibilities curves
  D) a country to produce some of the product of its comparative disadvantage
  E) raised costs as more diverse product is produced internally

Question 2

Refer to above figure. If the economy were in the initial position (where OmL1 workers were in manufacturing, what trade policy might gain ABC of economic welfare?
 
  What will be an ideal response?

[raili21]

Answer to Question 1

C

Answer to Question 2

Import-substitution giving protection to manufacturing.

[karateprodigy]

Thank you

[raili21]

No problemo