In the specific factors model, following trade, the increase in labor wages is lower than the increase in the new price of cloth (PC), as we see in the chart, due to:

a.

The low skills that food laborers bring as they move to the cloth sector

b.

The inability of the cloth sector to absorb more labor

c.

Diminishing marginal productivty of labor as more laborers move to the cloth sector

d.

Labor moving to the other country seeking better opportunities

Wage rate, w PX MPLE Pc increases 7% Wage rate rises by less than 7% Pex MPLC Pix MPLC Labor used in Labor used cloth, Lc Amount of labor in food, LE shifted from food to clothWage rate, w PX MPLE Pc increases 7% Wage rate rises by less than 7% Pex MPLC Pix MPLC Labor used in Labor used cloth, Lc Amount of labor in food, LE shifted from food to cloth