Suppose that land is specific to agriculture, capital is
Specific to manufacturing, and labor is mobile between
Sectors.According to the specificfactors model, if this
Country begins importing manufactured goods, which
Factor will experience the highest unemployment?
A)Labor
B)Capital
C)Land
D)No factors will experience unemployment.

Question

Suppose that land is specific to agriculture, capital is
Specific to manufacturing, and labor is mobile between
Sectors.According to the specific­factors model, if this
Country begins importing manufactured goods, which
Factor will experience the highest unemployment?
A)Labor
B)Capital
C)Land
D)No factors will experience unemployment.

Quizplus · Accepted Answer

In the specific-factors model, labor is mobile and can move between sectors, so it will not experience unemployment. Capital and land are specific to their sectors, but the model assumes full employment, so no factors will experience unemployment.

Suppose That Land Is Specific to Agriculture, Capital Is