Question

If Australia has relatively more land per worker, and Belgium has relatively more capital per worker, then if trade began between these two countries Group of answer choices the relative price of the capital-intensive product would decrease in Belgium. the relative price of the land-intensive product would increase in Belgium. the relative price of the capital-intensive product would increase in Australia. relative product prices would diverge between Australia and Belgium. the relative price of the land-intensive product would increase in Australia.

Answer 1

the relative price of the land intensive product would increase in Australia

Step-by-step explanation:

In business, relative price refers to how expensive the price of a certain product perceived compared other products.

When Belgium and Australia involved in a trade, some percentage of Belgium Capital's will be invested in Australia . As a result , there will be more land in Australia that require more workers to handle the operation.

This will cause relative price of the land intensive product would increase in Australia since people who live in this area will have higher average income compared to the people who live in areas without investment.