1) Criticism of the Lewis model include a. capitalist profits may go into labor-saving capital, thus not increasing the demand for labor b. the wage rate in the industrial sector is not constant but rising c. the modern sector often includes increasing returns to scale 2) The Lewis Model (also called the Surplus Labor Model) has two sectors, which are a. traditional and industrial b. agrarian and agricultural c. industrial and urban.

1) Criticism of the Lewis model include a. capitalist profits may go into labor-saving capital, thus not increasing the demand for labor b. the wage rate in the industrial sector is not constant but rising c. the modern sector often includes increasing returns to scale 2) The Lewis Model (also called the Surplus Labor Model) has two sectors, which are a. traditional and industrial b. agrarian and agricultural c. industrial and urban.

EBK HEALTH ECONOMICS AND POLICY

7th Edition

ISBN:9781337668279

Author:Henderson

Publisher:Henderson

Chapter2: Using Economics To Study Health Issues

Section: Chapter Questions

Problem 4QAP

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Economics Modify the Lewis model and assume that there is a strictly positive marginal product of labor in the traditional sector. Use figures with production functions in the traditional and the modern sectors to show what the equilibrium is when no one wants to move away from agriculture. What assumptions do you have to make about production functions to arrive at the conclusion that fewer people will end up in agriculture? Use the same starting point as in the above question. Derive the demand for labor in the traditional and in the modern sectors. Show graphically what the characteristics of the equilibrium would look like when no one wants to change sectors.
5. Graphical show the effects of the movement of surplus labor in the Lewis model. Plot only the marginal product in the two sectors. Write a brief note explaining the movement.
24. Economics: Labor Economics Thank you for your help and support Academic Agent!
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