What Is the Specific Factor Model

The specific factor (SF) model is designed to evaluate the real-world phenomenon that some factors of production are more mobile between industries than others. It does that by assuming that one factor (capital) cannot move between industries, while the other factor (labor) can freely move.

What does the specific factors model allow us to analyze?

What does the specific factors model allow us to analyze? the returns to factors of production and the allocation of resources between sectors. In the specific factors model, it is assumed that labor: … The marginal product of labor declines as the amount of labor used in a sector increases.

Why are specific factors model curved?

In the Specific Factors model, the PPF is a curved line whereas it is a straight line in the Ricardian Model. The curvature of this line reflects the diminishing returns to labor that we see in the production function, where the slope clearly flattens out.