In the Specific Factor Model,the Effect of an Increase in the Productivity

question 5

Multiple Choice

In the specific factor model,the effect of an increase in the productivity of labor in the production of cloth will cause a(an) ________ in the quantity of labor used to produce cloth,a(an) ________ in the quantity of labor used to produce food and a(an) ________ in the wage rate.

• A) increase; decrease; increase
• B) decrease; increase; increase
• C) increase; decrease; decrease
• D) decrease; increase; no change
• E) increase; increase; no change

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Definitions:

Demand Shift

A change in the quantity of a product or service that consumers are willing and able to buy, due to factors such as price, consumer preferences, or income changes.

Equilibrium Price

the price at which the quantity of goods supplied equals the quantity of goods demanded, reaching a state of market balance.

Demand Increase

A situation where the desire and willingness to purchase a good or service grows, often resulting in higher prices.

Supply Decrease

A reduction in the quantity of a product or service that is available for sale.