Suppose labor and capital are the only two resources used for production. In the short run:
A) only capital can move freely between sectors.
B) only labor can move freely between sectors.
C) both capital and labor can move freely between sectors.
D) both resources are restricted in their movement.

Question

Quizplus · Accepted Answer

In the short run, capital is fixed, meaning it cannot be easily moved between sectors. On the other hand, labor is more flexible and can transfer between sectors. Therefore, option B is the correct answer.

Suppose Labor and Capital Are the Only Two Resources Used