The Difference Between Temporary Factor- Price Differentials and Equilibrium Factor-

question 48

Multiple Choice

The difference between temporary factor- price differentials and equilibrium factor- price differentials is that

• A)temporary differentials are affected by supply and demand whereas equilibrium differentials are not.
• B)the government can only eliminate equilibrium differentials.
• C)equilibrium differentials lead to,and are eliminated by,factor mobility whereas temporary differentials do not.
• D)only equilibrium differentials are interesting for policy purposes.
• E)temporary differentials lead to,and are eliminated by,factor mobility whereas equilibrium differentials do not.

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