The two-sector (manufacturing and agriculture) specific-factors model assumes that in each industry there are factors of production that are:
A) less productive.
B) outsourced to other nations.
C) fixed or immobile.
D) very scarce and therefore have a high supply price.

Question

Quizplus · Accepted Answer

The two-sector specific-factors model assumes that some factors of production are specific to each sector (for example, land is specific to agriculture, while capital and skilled labor are specific to manufacturing) and that these factors are fixed or immobile in the short run. This means that they cannot be easily transferred between industries if there is a change in relative prices, creating winners and losers among different groups of factors and leading to income redistribution.

The Two-Sector (Manufacturing and Agriculture) Specific-Factors Model Assumes That in Each