Question

In a market system, as one industry expands while another contracts, resources will flow:

A. Away from the expanding industry towards the contracting one
B. From one industry due to the changes in resource prices paid by firms
C. Towards the industry where the product demand is declining
D. Because resource allocation will have to equalize between the two industries

Answer 1

In a market system, resources will flow away from the expanding industry towards the contracting one.

Step-by-step explanation:

In a market system, as one industry expands while another contracts, resources will flow Away from the expanding industry towards the contracting one.

This is because resources, such as labor and capital, are typically mobile and can be reallocated to where they are most needed.

When an industry is expanding, it requires more resources, so resources will shift from the contracting industry to the expanding one.