If the Price of the Capital -Intensive Product Rises More

question 10

Multiple Choice

If the price of the capital -intensive product rises more than does the price of the land- intensive product, then

• A) demand will shift away from the capital-intensive product, and its production will decrease.
• B) the relative price of the capital-intensive product will fall to some point between the pretrade relative prices.
• C) the country that exports the capital-intensive good will lose its comparative advantage.
• D) demand will shift away from the capital-intensive product, and its production will decrease relative to that of the land-intensive product.
• E) the production of the capital-intensive product will decrease, but by less than production of the land-intensive product.

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