Using the specific factors model, assume that strawberry production requires the specific factor of land, tractor production requires the specific factor of capital, and labor is variable. If the United States is capital abundant compared to Mexico, and Mexico is land abundant compared to the United States, then in the short run with trade we would expect
A) the income of U.S. land owners to increase.
B) the income of U.S. workers to increase.
C) the income of Mexican workers to increase.
D) the income of Mexican land owners to increase.
D
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The division of labor and specialization explain
A) why the average product of labor falls when firms use more capital or change the layout of their businesses. B) why, when the marginal product of labor increases, so does the average product of labor. C) why the marginal product of labor rises as a firm hires its first units of labor. D) why firms may find it profitable to use more workers when the marginal product of labor is negative.
In a 100-percent-reserve banking system, if people decided to decrease the amount of currency they held by increasing the amount they held in checkable deposits, then
a. M1 would increase. b. M1 would decrease. c. M1 would not change. d. M1 might rise or fall.