After trade opens,the short run impact on the income of the specific factor that is relatively scarce will be
A)a decrease in its income.
B)an increase in its income.
C)no change in its income.
D)indeterminate, income effects are not possible to know.

Question

Quizplus · Accepted Answer

When trade opens, the specific factor that is relatively scarce will face increased competition from foreign producers who have comparative advantage in producing the same good. This will lead to a decrease in demand for the specific factor domestically, causing a decrease in its income.

After Trade Opens,the Short Run Impact on the Income of the Specific