If the Price of the Capital Intensive Product Rises More

question 6

Multiple Choice

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

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