1) In a two-sector (manufacturing and agriculture) specific-factors model: a. la
ID: 1133939 • Letter: 1
Question
1) In a two-sector (manufacturing and agriculture) specific-factors model:
a. land is specific to the manufacturing sector.
b. labor is specific to the manufacturing sector.
c. capital is specific to the manufacturing sector.
d. labor and capital are specific to the manufacturing sector.
2) In a two-sector (manufacturing and agriculture) specific-factors model:
a. land, labor, and capital are transferable between sectors.
b. labor is transferable between sectors.
c. land is transferable between sectors.
d. capital is transferable between sectors.
Explanation / Answer
In a two sectors ( manufacturing and agriculture) specific factors model, land is specific to agriculture and capital is specific to the manufacturing sector and labour can move freely between the sectors. Thus land and capital are the sector specific factors and labour is the movable factor.
1) The correct answer is, c. capital is specific to the manufacturing sector.
2) The correct answer is, b. labor is transferable between sectors.
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