Multiple Choice
Suppose that due to a drought, the price of agricultural
Goods rises.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 the percentage change in the relative price of
Agricultural goods.
C) The percentage change in labor income is greater than the percentage change in the relative price of
Manufacturing goods.
D) The percentage change in labor income is less than the percentage change in the relative price of
Agricultural goods.
Correct Answer:
Verified
Correct Answer:
Verified
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