The specificfactors model concludes that if there is a
Decrease in relative price (and an expansion) in one
Industry, the factor specific to that industry:
A)will experience an increase in its marginal product.
B)will experience a decrease in its marginal product.
C)will be transferred to other industries.
D)will have competition as additional units of that specific factor are hired from other industries.

Question

The specific­factors model concludes that if there is a
Decrease in relative price (and an expansion) in one
Industry, the factor specific to that industry:
A)will experience an increase in its marginal product.
B)will experience a decrease in its marginal product.
C)will be transferred to other industries.
D)will have competition as additional units of that specific factor are hired from other industries.

Quizplus · Accepted Answer

A decrease in the relative price of a good in an industry typically leads to a decrease in the marginal product of the factor specific to that industry, as the factor becomes less valuable in producing the good.

The Specific­factors Model Concludes That If There Is a

The Specificfactors Model Concludes That If There Is a