The following input-requirements data are for Country A, a capital-abundant country that produces nothing but bread and wine using only capital and labor as inputs. 1 Pound of Bread1 Gallon of WineCapital Input5 units20 unitsLabor Input4 units10 units In the long run, which of the following can most reasonably be inferred after this country engages in free trade?
A. The wage rates will decline but the returns to capital will increase.
B. The returns to capital will rise in the wine industry and will fall in the bread industry.
C. The returns to capital will decline but the wage rates will increase.
D. The wage rates will increase in the wine industry and will decline in the bread industry.
Answer: A
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