Question
Assume a specific factors economy produces two goods, cloth and food, and that when representing the...
Assume a specific factors economy produces two goods, cloth and food, and that when representing the output of this economy graphically, cloth is on the x-axis and food is on the y-axis.
When the price of cloth increases by 7% and the price of food increases by 7%,
A.
the real wage rates are unaffected.
B.
the output of cloth rises.
C.
the marginal product of labor in the cloth sector falls.
D.
labor shifts from the food sector to the cloth sector
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Answer #1
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