Suppose Portugal has 700 workers and 26,000 units of capital, and France has 18,000 workers and 700 units of capital. Technology is identical in both countries. Assume that wine is the capitalintensive good and cloth is the laborintensive good. Which of the following statements is CORRECT if the nations start trading with each other?
a. Wages will increase in Portugal.
b. Rental rates in France will increase.
c. Wages in France will decrease.
d. Rental rates in Portugal will increase
Ans: d. Rental rates in Portugal will increase
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