What are some distinctions between light industry and heavy industry? Why do economies tend to start with light, and move to heavy industries?
What will be an ideal response?
Usual distinctions include consumer vs. capital goods and labor- vs. capital-intensive goods. Economies tend to start with light industry because they require little capital and skills, in accordance with factor endowments. Also light industry tends to produce goods needed immediately and affordable by a large share of the population.
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If movies on DVD for home rental and movies seen at a theater are substitutes, and the price of movies seen at a theater increases, the demand for movies on DVD will:
A) increase. B) stay the same. C) decrease. D) cannot be determined.
According to Tobin's q theory, ________ policy can affect ________ spending through its effect on the prices of common stock
A) fiscal; consumption B) fiscal; investment C) monetary; consumption D) monetary; investment