Suppose Country A produces two goods, Good X and Good Y. Production of Good X involves an intensive use of skilled workers. Good Y is a relatively capital-intensive good. If the country experiences a wave of immigration of skilled workers, capital remaining unchanged, the Rybczynski theorem predicts that:
A. the production of both goods will increase, but increase in Good X will be much higher than increase in Good Y.
B. the production of Good Y will contract.
C. the production of Good X will contract.
D. the production of both the goods will expand in the same proportion.
Answer: B
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