1. 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) be higher in the export-competing section 

(e) will be higher in the import-competing sector 

2. In the Specific Factors model, with two goods (food and cloth), one mobile factor of production (labor) and two specific factors of production (labor and capital), which of the following increase the quantity of labor used food production? 

(a) an increase in the price of cloth relative to that of food 

(b) an increase in the price of food relative to that of cloth 

(c) a decrease in the price of labor 

(d) an equal percentage increase in the price of food and cloth 

(e) an equal percentage decrease in the price of food and cloth

Answer rating: 100% (QA)

b will be the same in both sectors Explanation In the Specific Factors model w... View the full answer