Final answer:
The Stolper-Samuelson Theorem explains the relationship between changes in prices and the incomes of factors of production.
Step-by-step explanation:
The Stolper-Samuelson Theorem is an economic theory that explains the relationship between changes in prices and the incomes of factors of production, such as labor and capital. According to the theorem, if the price of a good that a factor of production specializes in producing increases, then the income of that factor will also increase. Conversely, if the price of a good decreases, the income of the factor will decrease as well.
For example, let's say a country specializes in producing cars, and the price of cars increases. This would lead to an increase in the income of the workers and firms involved in the car production industry. On the other hand, if the price of cars decreases, the income of these workers and firms will decrease.
The Stolper-Samuelson Theorem helps explain the distributional effects of changes in trade policies or technological advancements on different factors of production.