Suppose That the Home Country in the Two­sector

question 122

Multiple Choice

Suppose that the Home country in the two­sector
(manufacturing and agriculture) specific­factors model
Has a comparative advantage in manufactured output.
Which statement below best describes changes in
Returns on capital and land after trade occurs?

• A)The return on capital and land will both rise.
• B)The return on capital and land will both fall.
• C)The return on capital will rise and the return on land will fall.
• D)The return on capital will fall and the return on land will rise.

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Definitions:

Social Norms

Shared, unstated rules or standards of behavior that are considered acceptable within a group or society.

Family Members

Individuals who are part of an extended family, including parents, siblings, grandparents, and other close relatives.

Context

The circumstances, background, or environment in which a particular event occurs or a concept is understood.

Morphostasis

Stability in a system.