According to the Stolper-Samuelson theorem, a price change that reduces a country's production of its exportable product would:
A)reduce the returns to all factors of production within the country.
B)raise the returns to all factors of production within the country.
C)reduce the returns to the factor of production used intensively in the export industry.
D)raise the returns to the factor of production used intensively in the export industry.

Question

Quizplus · Accepted Answer

The Stolper-Samuelson theorem states that a price change that reduces a country's production of its exportable product would reduce the returns to the factor of production used intensively in the export industry. This is because a reduction in the production of the exportable product would lead to a decrease in the demand for the factor of production used intensively in that industry, thus reducing its returns.

According to the Stolper-Samuelson Theorem, a Price Change That Reduces