Canada Has a Much Lower Population Density Than Does Japan

Multiple Choice

Canada has a much lower population density than does Japan. Therefore, the price of land (relative to the price of labour) is lower in Canada than in Japan. Consider a Canadian firm and a Japanese firm, both producing rice, both having access to the same technologies, and both striving to minimize costs. Now suppose that the relative price of land rises in Canada but remains the same in Japan. The effect will be to

A) decrease the land/labour ratio for the Canadian firm.
B) increase the land/labour ratio for both the Canadian and the Japanese firms.
C) increase the land/labour ratio for the Canadian firm.
D) not change the land/labour ratio for either firm.
E) decrease the land/labour ratio for both the Canadian and the Japanese firms.