Assume specific-factors economy produces two goods

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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 5% and the price of food increases by 5%,

A) the output of cloth rises.

B) the output of food falls.

C) the real incomes of capital owners remain the same.

D) the wage rate rises by less than the increase in the price of cloth.

Reference no: EM131086127

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