Scenario: Farm Country and Industry Country Are Two Neighboring Countries

Multiple Choice

Scenario: Farm Country and Industry Country are two neighboring countries. Both countries produce only one good: good X. Production in both countries is a function of total efficiency units of labor and physical capital stock.
-Refer to the scenario above.What will likely happen if there is an increase in entrepreneurial activity in Industry Country?

A) Output will remain bigger than in Farm Country.
B) Income per capita will fall in Industry Country.
C) Productivity in Industry Country will increase.
D) Farm Country will have relatively greater output because its firms face less competition.