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Scenario: Farm Country and Industry Country Are Two Neighboring Countries

Question 144

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.A labor strike will disproportionally affect output in ________.


A) the country that uses worse technology
B) Farm Country, if it uses less capital in the production of the same amount of good X as Industry Country
C) Industry Country, if both countries face the same aggregate production function
D) the country that produces more output initially

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