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Use the following information to answer the question. Manufacturing: Sales revenue = PM × QM =...

Use the following information to answer the question.
Manufacturing: Sales revenue = PM × QM = 150
Payments to labor = W × LM = 100
Payments to capital = RK × K = 50
Agriculture: Sales revenue = PA × QA = 150
Payments to labor = W × LA = 50
Payments to land = RT × T = 100
Holding the price of manufacturing constant, suppose the price of agriculture increases by 20% and the wage increases by 10%. The rental on land increases by:
   
a. 25%.
b. 7.5%.
c. 20%.
d. 15%.

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answer is a 25%

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