The Lewis model is criticized for assuming that real urban wages are constant and that migration and modern sector employment grow proportionately (with urban full employment). What does that following Figure imply? Real wage (= MPLM) D₂ D₁ WM A 0 E D₁ (KMI) D₂ (KM2) L₁ Quantity of labour S a. If capitalist profits are reinvested in labor-saving capital equipment, labor per unit of output that is required will remain unchanged. b. Surplus labor exists in rural areas while there is full employment in the urban area. c. In spite of all criticism, the Lewis model is important for its emphasis on labor transfer between traditional agriculture and modern industry. d. Labor market doesn't need to be competitive, implying an increase in real urban wages up to the point where the supply of rural surplus labor is exhausted.

The Lewis model is criticized for assuming that real urban wages are constant and that migration and modern sector employment grow proportionately (with urban full employment). What does that following Figure imply? Real wage (= MPLM) D₂ D₁ WM A 0 E D₁ (KMI) D₂ (KM2) L₁ Quantity of labour S a. If capitalist profits are reinvested in labor-saving capital equipment, labor per unit of output that is required will remain unchanged. b. Surplus labor exists in rural areas while there is full employment in the urban area. c. In spite of all criticism, the Lewis model is important for its emphasis on labor transfer between traditional agriculture and modern industry. d. Labor market doesn't need to be competitive, implying an increase in real urban wages up to the point where the supply of rural surplus labor is exhausted.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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