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What are the consequences from trade going to be? The most important things that we care about are trade's effects on the prices the goods in each country, the production level of the goods, employment levels in each industry, the pattern of trade, consumption levels, wages and incomes, and the welfare effects...
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Because of technology differences, relative prices of the two goods will differ between countries. Workers in the technologically advanced country will enjoy a higher standard of living than in the technologically inferior country. The reason for this is that wages are usually based on productivity, therefore in the country that is more productive, workers will receive higher wages...
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Comparative study of trade between Australia, USA and Japan
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