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(s) will gain the most after trade occurs?
A) capital
B) land
C) labor
D) land and capital

Question

Quizplus · Accepted Answer

In the two-sector specific-factors model, when a country has a comparative advantage in manufactured output and trade occurs, capital, which is the specific factor used in the manufacturing sector, gains the most because the expansion of the manufacturing sector increases the return to capital.

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