Final answer:
The statement regarding free trade exploiting less productive countries is false. Free trade based on comparative advantage can increase overall wage rates and efficiency by allowing countries to specialize in industries where they are more productive, although the benefits are not evenly distributed across the economy.
Step-by-step explanation:
The statement 'Free trade exploits less productive countries whose workers make low wages' is false. The concept of comparative advantage suggests that when countries engage in free trade, they tend to specialize in economic activities where they are relatively more productive. This specialization, in turn, can raise the average wage rate economy-wide. For instance, if agricultural trade barriers are removed, a country like Country C that specializes in the production of sugar may benefit by selling its product on the international market, potentially improving the situation for both landowners and agricultural workers.
In practice, while free trade may cause difficulties for import-substituting industries, leading to a reduction in their incomes, on a broader scale it facilitates a focus on industries where nations hold a comparative advantage, enhancing overall productivity and increasing wages. However, the resulting benefits and raising of wages are not evenly distributed and may not immediately impact workers in low-income countries to the same extent as workers in developed economies.