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Economics Mcqs
Q
Assume that Country A is relatively abundant in labor and Country B is relatively abundant in land Note that wages are the returns to labor and rents are the returns to land According to the factor price equalization theorem, once Country A begins specializing according to comparative advantage and trading with Country B: A. wages and rents should fall in Country A B. wages and rents should rise in Country A C. wages should rise and rents should fall in Country A D. wages should fall and rents should raise in Country A ?
AXa. wages and rents should fall in country a
BB. Wages and rents should rise in country a
CC. Wages should rise and rents should fall in country a
DD. Wages should fall and rents should raise in country a
Correct Answer:
C. C. Wages should rise and rents should fall in country a