In the Specific Factors Model,a 0% Increase in the Price

question 68

Multiple Choice

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

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

---

Definitions:

Single-Price Monopoly

A monopolistic market structure where the monopolist charges the same price for every unit of the product sold to every consumer.

Economically Inefficient

A situation where resources are not used in the most productive way, leading to wasted potential output or outcomes.

Profit-Maximizing Output

The level of production at which a business achieves the highest possible profit, where marginal cost equals marginal revenue.