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

question 52

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

---

Definitions:

Total Surplus

The combined benefit that all participants (consumers and producers) receive in a market, represented by the sum of consumer and producer surplus.

Market Equilibrium

A condition in a market where the quantity demanded equals the quantity supplied, leading to a stable price.

Good

A tangible item that is produced and is capable of being offered to a market to satisfy a want or need.

Quantity

The amount or number of a material or immaterial goods considered as units or an entity.