suppose Belgium produces only two goods, chocolate and lace. If Belgium has a comparative advantage in lace, a move toward free trade will

a. benefit chocolate workers, harm lace workers in the short run, but benefit the nation as a whole.
b. harm chocolate workers in the short run, benefit lace workers, but benefit the nation as a whole
c. harm chocolate workers in the short run, harm lace workers, but benefit the nation as a whole
D. benefit chocolate workers, harm lace workers in the short run, but harm the nation as a whole.

Is the answer: D

No, the correct answer is A. A move toward free trade will benefit chocolate workers, harm lace workers in the short run, but benefit the nation as a whole.

To understand why, we need to look at the concept of comparative advantage. Comparative advantage refers to a country's ability to produce a good or service at a lower opportunity cost than another country. In this case, Belgium has a comparative advantage in lace production.

When a country engages in free trade, it can specialize in producing and exporting the goods for which it has a comparative advantage, while importing goods for which it has a comparative disadvantage. In this scenario, Belgium should focus on producing and exporting lace while importing chocolate, as it has a comparative advantage in lace.

As a result, the demand for lace from other countries will increase, leading to more production and potentially higher wages for lace workers in Belgium. On the other hand, the demand for Belgian chocolate may decrease due to competition with imported chocolate, possibly leading to layoffs or lower wages for chocolate workers in the short run.

However, overall, the nation as a whole will benefit from the move towards free trade. The increased specialization in lace production will lead to increased efficiency and productivity, which can result in economic growth and higher living standards for the country as a whole.

No, the answer is not D. The correct answer is A. A move toward free trade will benefit chocolate workers, harm lace workers in the short run, but benefit the nation as a whole. This is because Belgium has a comparative advantage in lace, meaning they can produce lace at a lower opportunity cost compared to other countries. By specializing in lace production and trading it with other countries, Belgium can increase its overall production and consumption of both goods, leading to overall gains for the nation. However, in the short run, there may be some disruptions and adjustment costs for lace workers who may face increased competition from foreign producers.