In the specificfactors model, an increase in the price of
The agricultural good will cause:
A)a decrease in nominal wages in both the agricultural and manufacturing sectors.
B)an increase in nominal wages in both the agricultural and manufacturing sectors.
C)an increase in both nominal and real wages in both the agricultural and manufacturing sectors.
D)an increase in the nominal wage in the agricultural sector and a decrease in nominal wage in the
Manufacturing sector.

Question

In the specific­factors model, an increase in the price of
The agricultural good will cause:
A)a decrease in nominal wages in both the agricultural and manufacturing sectors.
B)an increase in nominal wages in both the agricultural and manufacturing sectors.
C)an increase in both nominal and real wages in both the agricultural and manufacturing sectors.
D)an increase in the nominal wage in the agricultural sector and a decrease in nominal wage in the
Manufacturing sector.

Quizplus · Accepted Answer

In the specific-factors model, an increase in the price of the agricultural good raises the demand for labor in the agricultural sector, leading to higher nominal wages in both sectors due to labor mobility and competition.

In the Specific­factors Model, an Increase in the Price of

In the Specificfactors Model, an Increase in the Price of