When resource markets are free to adjust,temporary resource price differentials will cause _____
A)the equalization of payments for similar resources in different uses.
B)the allocation of fewer resources to higher-paid uses.
C)a change in the supply of resources.
D)no change in the allocation of resources.
E)price differentials of the final product using the resource.

Question

Quizplus · Accepted Answer

When resource markets are free to adjust, temporary resource price differentials will lead to the equalization of payments for similar resources in different uses. This means that resources will be allocated to their most productive uses, resulting in equal pay for similar resources. The other options are not necessarily true or relevant when resource markets are free to adjust.

When Resource Markets Are Free to Adjust,temporary Resource Price Differentials