Assume a Country Produces Only Wine and Guns

question 16

Multiple Choice

Assume a country produces only wine and guns. Both wine and gun production use land and labor as their only inputs. Wine production is relatively land-intensive while gun production is relatively labor-intensive. According to the Rybczynski theorem, a significant rise in immigration is most likely to lead to:

• A)an increase in the production of both wine and guns.
• B)an increase in wine production by a greater proportion than the increase in the size of the labor force due to immigration.
• C)an increase in the production of guns by a greater proportion than the increase in the size of the labor force due to immigration.
• D)an increase in wine production by a greater proportion than the increase in the production of guns.