QUESTION A.4

In a Mixed Specific Factors model with two sectors, Cars (C) and Wheat (W), Capital (K) is specific to C and Land (A) is specific to W. If the government imposes a tariff on the imports of W then

A.Both owners of K and owners of A will benefit.

B.Owners of A will benefit.

C.Owners of K will benefit.

D.Neither owners of K nor owners of A will benefit.

(1 mark)

Explain your answer in up to 200 words and using a diagram