The degree of a factor's specificity is inversely related to
A) the mobility of the factor, with more mobile factors having less specificity.
B) the amount of time required to redeploy the factor to a different industry.
C) the cost of the factor as a proportion of the long-run total cost of production.
D) technology differences between two countries, with a less advanced technology resulting in less factor specificity.
E) factor quality, with lower quality factors having a lower level of specificity.

Question

Quizplus · Accepted Answer

The more mobile a factor is, the less specific it tends to be. For example, labor is a highly mobile factor and therefore less specific, while a specialized machine unique to a particular industry would be highly specific.

Note: The other choices are either unrelated or do not have an inverse relationship with factor specificity, so they are not the best choices.

The Degree of a Factor's Specificity Is Inversely Related to