In the two-sector (manufacturing and agriculture) specific-factors model, which resource(s) is(are) transferable between sectors?
A) land
B) labor
C) capital
D) labor and capital

Question

Quizplus · Accepted Answer

In the two-sector specific-factors model, only labor is transferable between sectors. This is because the model assumes that each sector has a specific factor of production that cannot be easily transferred to the other sector. In this case, agriculture is assumed to have a fixed amount of land, which cannot be easily transferred to the manufacturing sector, while manufacturing is assumed to have a fixed amount of capital, which cannot be easily transferred to the agriculture sector. However, labor can move between the two sectors, as workers can be easily trained to work in either sector.

In the Two-Sector (Manufacturing and Agriculture) Specific-Factors Model, Which Resource(s)