In a market system, as one industry expands while another contracts, resources will flow
A)away from the expanding industry toward the contracting one.
B)across industries, driven by the changes in resource prices paid by firms.
C)toward the industry where the product demand is declining.
D)because resource allocation will have to equalize between the two industries.

Question

Quizplus · Accepted Answer

Resources flow across industries in response to changes in resource prices, which are influenced by the demand for those resources. As one industry expands, it demands more resources, potentially increasing their prices, which attracts resources from other industries, including those that are contracting.

In a Market System, as One Industry Expands While Another