The Specific-Factors Model Concludes That If There Is a Decrease

question 60

Multiple Choice

The specific-factors model concludes that if there is a decrease in the relative price in (and a contraction of) one industry, the factor specific to that industry:

• A) will experience an increase in its marginal product.
• B) will experience a decrease in its marginal product.
• C) will be transferred to other industries.
• D) will have competition as additional units of that specific factor are hired from other industries.

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Definitions:

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