The Example of "Fair­trade" Coffee Illustrates the

question 60

Multiple Choice

The example of "fair­trade" coffee illustrates the
Problem of trying to stabilize returns to specific factors.
What is the problem?

• A)Production is inherently egalitarian-all resources get the same return.
• B)When coffee prices rose, as a result of the price stabilization efforts, the specific factors' incomes would
• Have risen disproportionally, yet the fair­trade contracts
• Provided a smaller increase.
• C)When coffee prices fell, the farmers sold their plots and sought employment in other industries.
• D)Fair­trade efforts are unpopular among U.S. workers, who see imports increase and their returns
• From coffee production fall.