The specificfactors model concludes that if there is an
Increase in relative price (and an expansion) in one
Industry, the factor specific to that industry:
A)will experience an increase in its marginal product.
B)will experience a decrease in its marginal product.
C)will be transferred to other industries.
D)will have competition as additional units of that specific factor are hired from other industries.

Question

The specific­factors model concludes that if there is an
Increase in relative price (and an expansion) in one
Industry, the factor specific to that industry:
A)will experience an increase in its marginal product.
B)will experience a decrease in its marginal product.
C)will be transferred to other industries.
D)will have competition as additional units of that specific factor are hired from other industries.

Quizplus · Accepted Answer

The specific-factors model states that an increase in relative price and expansion in one industry leads to an increase in demand for the factor specific to that industry. As a result, the marginal product of that factor in that industry will also increase, leading to higher wages for that factor.

The Specific­factors Model Concludes That If There Is an

The Specificfactors Model Concludes That If There Is an