When a country's labor market is in equilibrium in the specific factors model, the wage rate
A) will be higher in the sector where product price is lower.
B) will be the same in both sectors.
C) will be higher in the sector where product price is higher.
D) will be higher in the export-competing sector.
E) will be higher in the import-competing sector.

Question

Quizplus · Accepted Answer

In the specific factors model, the wage rate in the two sectors will be equal in equilibrium because labor is perfectly mobile between the sectors. Therefore, the same wage rate will prevail in both the sectors.

When a Country's Labor Market Is in Equilibrium in the Specific