EC239 Lecture 4: Lesson 4
Document Summary
The specific factor model: developed by paul samuelson (1971) & ronald jones (1971, considered as a variant of the ricardian model that includes 2 additional factors of production: capital & land. Land is specific to the food sector as it cannot be used in another industry. Labour is a mobile factor that can move between sectors. If food or cloth productions are maxed out, we get intercepts (l). To produce more cloth, we need to move some labour from food production to cloth production. Say we move one unit of labour from food to the cloth industry. The extra cloth produced by the extra unit of labour is mplc and the loss in food production due to one less unit of labour is the mplf. Hence, the opportunity cost of cloth production or the slope of the ppf is -
