Question

11) If a product becomes more popular and consumers want more produced, which of the following best describes what happens to move more factors of production into that industry?

A)         An agency of the Federal government directs the movement of factors.

B)         The chief executive officers or presidents of corporations require that factors leave one industry and move to the other industry.

C)         Factor owners voluntarily move their factors because they want to satisfy the interests of consumers.

D)         Wages, rent, interest, and profit increase in that industry, thereby giving factors the incentive to move to that industry.

E)         Consumers increase their demand for the products and, as a result, the taxes the producers must pay decrease enabling the producers to hire more factors of production.

Answer 1

"D"

When the demand for the good increases it will lead to a higher return for the factors. that will incentivise them to move to that higher demand industry. The answer is "D".