Explain how trade will tend to emerge along the lines of ...

[asd123]

Explain how trade will tend to emerge along the lines of comparative advantage if markets are allowed to work freely.
 
  What will be an ideal response?

Question 2

Before the creation of the European Economic Community, there was the
 
  A) European Economic Union.
  B) European Coal and Steel Community.
  C) European Union.
  D) European Free Trade Area.
  E) Single European Community.

[macybarnes]

Answer to Question 1

Comparative advantage is determined by autarky prices. Foreign demand will tend to drive up (down) the autarky price of a country's comparative advantage (disadvantage) good, raising short term profits and attracting resources to that industry. These resources come from the import competing comparative disadvantage sector.

Answer to Question 2

B

[asd123]

Excellent

[6ana001]

Gracias!