MCQOPTIONS
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MCQOPTIONS
| 1. |
Assume that Country A is relatively abundant in labor and Country B is relatively abundant in land Note that wages are the returns to labor and rents are the returns to land According to the factor price equalization theorem, once Country A begins specializing according to comparative advantage and trading with Country B: A. wages and rents should fall in Country A B. wages and rents should rise in Country A C. wages should rise and rents should fall in Country A D. wages should fall and rents should raise in Country A ? |
| A. | wages and rents should fall in Country A |
| B. | wages and rents should rise in Country A |
| C. | wages should rise and rents should fall in Country A |
| D. | wages should fall and rents should raise in Country A |
| Answer» D. wages should fall and rents should raise in Country A | |