A One-Factor Economy Assume that we are dealing with an economy(which we call Home. In this economy Labor is the only factor of production Only two goods(say wine and cheese)are produced The supply of labor is fixed in each country The productivity of labor in each goods is fixed Perfect competition prevails in all markets Copyright C 2003 Pearson Education, Inc Slide 1-10Copyright © 2003 Pearson Education, Inc. Slide 1-10 A One-Factor Economy ▪ Assume that we are dealing with an economy (which we call Home). In this economy: • Labor is the only factor of production. • Only two goods (say wine and cheese) are produced. • The supply of labor is fixed in each country. • The productivity of labor in each goods is fixed. • Perfect competition prevails in all markets