Difference in environmental standards or other government regulations among nations ?
Correct answer: C. can affect production costs and thus alter comparative advantages and trade patterns
- A. have no impact on patterns of international trade
- B. have tended to make U.S steel companies more competitive internationally
- C. can affect production costs and thus alter comparative advantages and trade patterns
- D. have been eliminated by the nations participating in NAFTA
Explanation
Different environmental rules and regulations can change firms’ production costs. These cost differences alter comparative advantage and therefore the direction and composition of trade.
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