In the specific factors model,which of the following will increase the quantity of labor used in food production?
A)an increase in the price of food relative to that of cloth
B)a decrease in the price of labor
C)an equal percentage decrease in the price of food and cloth
D)an increase in the price of cloth relative to that of food
E)an equal percentage increase in the price of food and cloth

Question

Quizplus · Accepted Answer

An increase in the price of food relative to that of cloth will make food production more profitable, leading to an increase in the quantity of labor used in food production as producers seek to maximize profits.

In the Specific Factors Model,which of the Following Will Increase