Assume a specific factors economy produces two goods, cloth, and food, and that when representing the output of this economy graphically, the cloth is on the x-axis and food is on the y-axis. When the price of clothing increases by 4% and the price of food does not change does not change, a. labor shifts from the cloth sector to the food sector labor shifts from the cloth sector to the food sector. b. the wage rate rises by more than the increase in the price of cloththe wage rate rises by more than the increase in the price of cloth. c. the output of food fallsthe output of food falls. d. the real wage rates are unaffectedthe real wage rates are unaffected.
Assume a specific factors economy produces two goods, cloth, and food, and that when representing the output of this economy graphically, the cloth is on the x-axis and food is on the y-axis. When the price of clothing increases by 4% and the price of food does not change does not change, a. labor shifts from the cloth sector to the food sector labor shifts from the cloth sector to the food sector. b. the wage rate rises by more than the increase in the price of cloththe wage rate rises by more than the increase in the price of cloth. c. the output of food fallsthe output of food falls. d. the real wage rates are unaffectedthe real wage rates are unaffected.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Assume a specific factors economy produces two goods, cloth, and food, and that when representing the output of this economy graphically, the cloth is on the x-axis and food is on the y-axis. When the price of clothing increases by 4% and the price of food does not change does not change,
a. labor shifts from the cloth sector to the food sector labor shifts from the cloth sector to the food sector.
b. the wage rate rises by more than the increase in the price of cloththe wage rate rises by more than the increase in the price of cloth.
c. the output of food fallsthe output of food falls.
d. the real wage rates are unaffectedthe real wage rates are unaffected.
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