Suppose That World Demand Shifts Away from Agricultural Goods Toward

Multiple Choice

Suppose that world demand shifts away from agricultural goods toward high-tech manufactured goods. 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 increase in capital income is less than the percentage increase in labor income.
B) The percentage increase in labor income is more than the percentage increase in the relative price of manufacturing goods.
C) The percentage change in capital income is greater than zero.
D) The percentage increase in returns to land is more than the percentage increase in the relative price of manufacturing goods.