Q1 Q2 Q3 Q4 Like the simple Ricardian model the specific fac

Q1

Q2

Q3

Q4

Like the simple Ricardian model, the specific factors model O A. assumes an economy that produces two goods and that can allocate its labor supply between the two sectors. B. distinguishes between mobile and specific factors. C. has a production possibilities curve that reflects diminishing returns to labor. O D. allows for the existence of factors of production besides labor.

Solution

Q.1. A. The specific factor model assumes that an economy produces two goods and uses two factors of production, labor and capital.

Q.2. Marginal product of labor decreases due to the law of diminishing returns. As more and more labor is added to a a fixed unit of capital, the marginal product of labor falls.

Q3.D. The output of cloth increbases.

Q4.B. Different from the relative price that could prevail in the absence of trade.

Q4.