The Difference Between Temporary Factor-Price Differentials and Equilibrium Factor-Price Differentials

question 86

Multiple Choice

The difference between temporary factor-price differentials and equilibrium factor-price differentials is that

• A)equilibrium differentials are affected by shifts in demand and supply whereas temporary differentials are not.
• B)equilibrium differentials lead to,and are eliminated by,factor mobility whereas temporary differentials do not.
• C)the government can only eliminate equilibrium differentials.
• D)temporary differentials lead to,and are eliminated by,factor mobility whereas equilibrium differentials do not.
• E)only equilibrium differentials are interesting for policy purposes.

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