Economics · International Trade Theories
The Stolper-Samuelson theorem states that, under free trade, when all factors are mobile, an increase in the relative price of a good will:
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- 1equalize the real earnings of both factors of production
- 2keep the real earnings of both factors of production unchanged
- 3increase the real return of the factor used less intensively in the production of that good and decrease the real return of the other factor
- 4increase the real return of the factor used intensively in the production of that good and decrease the real return of the other factor✓
Correct answer
increase the real return of the factor used intensively in the production of that good and decrease the real return of the other factor
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