A Model of a Two-Factor Economy Factor Intensity In a world of two goods(cloth and food) and two factors(labor and land), food production is land- intensive, if at any given wage-rental ratio the land labor ratio used in the production of food is greater than that used in the production of cloth TELE>TOLC Example: If food production uses 80 workers and 200 acres, while cloth production uses 20 workers and 20 acres, then food production is land-intensive and cloth production is labor-intensive Copyright C 2003 Pearson Education, Inc Slide 4-6Copyright © 2003 Pearson Education, Inc. Slide 4-6 • Factor Intensity – In a world of two goods (cloth and food) and two factors (labor and land), food production is land￾intensive, if at any given wage-rental ratio the land￾labor ratio used in the production of food is greater than that used in the production of cloth: TF /LF > TC/ LC – Example: If food production uses 80 workers and 200 acres, while cloth production uses 20 workers and 20 acres, then food production is land-intensive and cloth production is labor-intensive. A Model of a Two-Factor Economy