📊 International Economics
Q. By adjusting the model of comparative advantage to include transportation costs along with production costs, we would expect
  • (A) the prices of traded goods to be lower than when there are no transportation costs
  • (B) specialization to stop when the production costs of the trading partners equalize
  • (C) the volume of trade to be less than when there are no transportation costs
  • (D) the gains from trade to be greater than when there are no transportation costs.
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✅ Correct Answer: (C) the volume of trade to be less than when there are no transportation costs

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