Answer Questions on the Basis of the Following Diagram

question 48

Multiple Choice

Answer questions on the basis of the following diagram. Assume all migration is costless.




-If wages are initially $10 in country X and $25 in country Y,then we should expect higher rates of capital investment in:

• A)X relative to Y,eventually resulting in increased labor demand in X
• B)X relative to Y,eventually resulting in reduced labor demand in X
• C)Y relative to X,eventually resulting in increased labor demand in X
• D)Y relative to X,eventually resulting in reduced labor demand in X