Which of the following is a key assumption in factor
Price insensitivity in response to a fall in FDI?
A)Technology is changing in the capitalintensive sector.
B)Technology is changing in the laborintensive sector.
C)Prices are changing for the capitalintensive good.
D)None of these is a key assumption.

Question

Which of the following is a key assumption in factor
Price insensitivity in response to a fall in FDI?
A)Technology is changing in the capital­intensive sector.
B)Technology is changing in the labor­intensive sector.
C)Prices are changing for the capital­intensive good.
D)None of these is a key assumption.

Quizplus · Accepted Answer

The key assumption of factor price insensitivity is that factor prices remain unchanged despite changes in FDI, which is not directly related to changes in technology or prices of goods.

Which of the Following Is a Key Assumption in Factor