Suppose that the home country in the two-sector (manufacturing and agriculture) specific-factors model has a comparative advantage in manufactured output. Which specific factor will gain after trade occurs?
A) capital
B) land
C) both capital and land
D) labor

Question

Quizplus · Accepted Answer

In the two-sector specific-factors model, if a country has a comparative advantage in manufactured output, the specific factor used in the manufacturing sector (capital) will gain from trade due to increased demand for manufactured goods, leading to higher returns for the factor specific to that sector.

Suppose That the Home Country in the Two-Sector (Manufacturing and Agriculture)