The supply curve of labor to industry in the Lewis model is horizontal if there is surplus labor in agriculture. This condition persists as long as
a. the marginal product of labor is less than the average product of labor in agriculture.
b. the marginal product of labor in agriculture is less than the marginal product of labor in industry.
c. there are diminishing returns to labor in agriculture.
d. the marginal product of labor in agriculture is zero.
D
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Free trade policies may lead to
A) a decrease in world output. B) price increases in world markets. C) some labor sectors experiencing some short-term job loss. D) none of the above.
If the government were to decrease its spending, it would expect aggregate demand to:
A. fall, and thus GDP to fall. B. rise, and thus GDP to fall. C. fall, and thus GDP to rise. D. rise, and thus GDP to rise.
The Scarcity Principle tells us ________, and the Cost-Benefit Principle tells us ________.
A. how to make good choices; that choices involve costs and benefits B. how to make choices; that choices must be made C. that choices must be made; how to make good choices D. that good choices eliminate scarcity; how to make good choices
Normative economics is
A) analysis involving value judgments about economic policies; or a statement of "what ought to be." B) analysis that is strictly limited to making either purely descriptive statements or scientific predictions. C) analysis of the behavior of the economy as a whole. D) decision making undertaken by households and business firms.