In the Specific Factors Model,a 5% Increase in the Price

question 28

Multiple Choice

In the specific factors model,a 5% increase in the price of food accompanied by a 0% increase in the price of cloth will cause wages to _,the production of cloth to _,and the production of food to .

• A)remain constant; increase; increase
• B)remain constant; decrease; decrease
• C)increase by 5%; remain unchanged; remain unchanged
• D)increase by less then 5%; decrease; increase
• E)increase by more then 5%; increase; remain unchanged

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Definitions:

Personal Use

Utilization of a company or business asset for individual, non-business related activities or benefits.

Drawings

Withdrawals of cash or other assets from a privately-owned business by the owner(s) for personal use.

Liabilities

Financial obligations or debts that a company owes to others, which must be settled over time through the transfer of economic benefits.

Debts And Obligations

Financial commitments or responsibilities, such as loans and promissory notes, that an entity is required to pay to others.