ABSTRACT
In the last two chapters we have examined models in which either (i) the factors of production were so specialized in the production of particular products that a change in demand could cause no transfer of factors between different occupations, so that prices changed but outputs remained constant, or else (ii) the factors of production were not specialized at all in the production of different products but could move so easily from one line of production to another that outputs changed without any change in prices. We shall now turn to the intermediate cases in which different factors can move between different lines of production but for one reason or another have certain partial advantages or disadvantages in particular lines of production. In these intermediate and more realistic cases a change of demand will, as we shall see, cause partly a change in prices and partly a change in outputs. There are many reasons why this intermediate situation may arise.
