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.

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Definitions:

Labour Costs

are the expenses incurred by employers for the work done by employees, including wages, benefits, and taxes related to employment.

Kiln

A furnace or oven for burning, baking, or drying, especially one for calcining lime or firing pottery.

Labour Hours

The total number of hours worked by employees in a specified period, commonly used as a measure of labor input.