Factor mobility aids in economic development when
A)A region suffers a natural disaster such as an earthquake or tornado.
B)A technological advance causes some firms to go out of business.
C)There is an increase in both outsourcing and insourcing.
D)All of the choices are correct.

Question

Quizplus · Accepted Answer

Factor mobility refers to the ability of labor, capital, and other resources to move between industries, regions, and countries in response to changes in demand and supply. In all of the given scenarios, factor mobility can aid in economic development by helping to reallocate resources to more productive uses. For example, after a natural disaster, labor and capital may need to move from heavily damaged areas to regions with more opportunities for rebuilding and reconstruction. Similarly, when some firms go out of business due to technological advances, the labor and capital that were previously used by these firms can be reallocated to other, more promising industries. Finally, an increase in outsourcing and insourcing can also lead to shifts in the allocation of labor and capital across countries, depending on where resources are most efficiently used. Overall, factor mobility can allow resources to move to where they have the greatest return, leading to increased productivity and economic growth.

Factor Mobility Aids in Economic Development When