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06%20The%20Specific%20Factors%20Model,%20Part%201

06%20The%20Specific%20Factors%20Model,%20Part%201 - The...

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1 1 The Specific Factors Model, Part 1 Introduction and Assumptions The Autarky Economy Equilibrium 2 Introduction What is a Specific Factor? – In the long-run , resources can generally be re- deployed between industries so that they can be considered mobile . – In the short-run , some factors of production may be industry specific because there is no (or very little) possibility of inter-industry substitution (or mobility). 3 Assumptions Assumption #1: There are only 2 countries. 1. The United States, US, and 2. Japan, J. 4 Assumptions Assumption #2: There are only 2 goods. 1. Automobiles, A, and 2. Food, F.
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