The international movement of factors of production:
A) is prohibited by the Geneva Convention.
B) is completely free of restrictions everywhere in the world.
C) tends to make the prices paid to factors of production among countries diverge over time.
D) tends to make the prices paid to the factors of production among countries converge over time.

Question

Quizplus · Accepted Answer

The movement of factors of production tends to make the prices paid to factors of production among countries converge over time. This is because factors of production, such as capital and labor, will move to countries where they can earn the highest return, which will increase their demand in those countries and decrease their demand in countries with lower returns. This will eventually lead to a convergence of prices paid to the factors of production among countries.

The International Movement of Factors of Production