Suppose That Due to a Drought, the Price of Agricultural

question 6

Multiple Choice

Suppose that due to a drought, the price of agricultural goods rises by 10%. If land is specific to agriculture, capital is specific to manufacturing, and labor is mobile between sectors, which of the following is true?

• A) The percentage change in labor income is less than zero.
• B) The percentage change in labor income is greater than 10%.
• C) The percentage change in returns to capital is greater than 10%.
• D) The percentage change in labor income is less than 10%.

---

Definitions:

Credit Cards

Financial instruments issued by banks allowing users to borrow funds to pay for goods and services with the agreement to repay the bank at a later date.

Medical Expense

Expenditures associated with the identification, cure, alleviation, management, or prevention of diseases, along with treatments that influence any aspect or functionality of the body.

Insulin

A hormone produced in the pancreas essential for regulating blood sugar levels, often administered medically to individuals with diabetes.

Tennis Club

An organization or facility dedicated to the sport of tennis, where members can play, receive coaching, and participate in competitions.