If the Price of the Capital - Intensive Product Rises

question 18

Multiple Choice

If the price of the capital - intensive product rises more than does the price of the land- intensive product,then

• A)the country that exports the capital- intensive good will lose its comparative advantage.
• B)demand will shift away from the capital- intensive product,and its production will decrease relative to that of the land- intensive product.
• C)demand will shift away from the capital- intensive product,and its production will decrease.
• D)the relative price of the capital- intensive product will fall to some point between the pretrade relative prices.
• E)the production of the capital- intensive product will decrease,but by less than production of the land- intensive product.

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Definitions:

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