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

question 50

Multiple Choice

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

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

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