**The Big Push Model of Development**The figure below illustrates the Big Push model of development. It showcases a scenario often analyzed in development economics where coordinated efforts can lead to industrialization and economic growth.### Detailed Explanation of the GraphThe graph plots quantity of output ($Q_i$) on the vertical axis against labor input per capita ($L_i/N$) on the horizontal axis.- **Points on the Graph:** - **Point F** - Represents the initial starting point. - **Point A** - Indicates the output level $Q1$ that the modern sector firm would produce initially. - **Point B** - Indicates the output level $Q2$ where profits are made even when costs are higher, represented by $W2$. - **Point C** - Another relevant point showing intersection with different cost levels.- **Lines:** - **Green Line ($W2$)** - Represents a higher cost structure. - **Blue Line ($Q1$)** - A lower level of output relevant to initial industry entry. - **Red Line** - Indicates a path or trend showing potential increasing returns or efficiency gains with higher outputs.### Multiple-Choice Question**Question:**Which of the following would NOT be relevant to the model?**Options:**A) If the modern sector firm were to enter, it would produce $Q1$ units of output. But if they expect other firms will enter, they also enter increasing output to $Q2$. At output $Q2$, everyone will make a profit even at $W2$.B) If the modern sector firm were to enter, it would produce $Q1$ units of output. But it would not enter as its costs would exceed its revenue at $W2$.C) All of the above.D) None of the above.E) If agents on their own, or with the encouragement of some coordinator, enter they can initiate industrialization, creating the big push, from point A to B.---### ExplanationThis question assesses the understanding of the Big Push theory in which coordinated effort or some sort of large-scale investment pushes the economy from a low-level equilibrium trap to a higher equilibrium with modern industrial capabilities.Understanding the graph and the critical points like $A$, $B$, $W2$, and how industrialization proceeds through increasing returns or collaborative efforts is

The Big Push model is a theory of economic growth that proposes simultaneous and coordinated…

he below given fgure illustrates the Big Push model of development. Which of the following would NOT be relevant? Q₁ Q₁ B A C) All of the above. C D) None of the above. W₂ L₁ F L/N OA) If the modern sector firm were to enter, it would produce Q 1 units of output. But if they expect other firms will enter, they also enter increasing output to Q2. At output Q2, everyone will make a profit even at W2. OB) If the modern sector firm were to enter, it would produce Q 1 units of output. But it would not enter as its costs would exceed its revenue at W2. 4 E) If agents on their own, or with the encouragement of some coordinator, enter they can initiate industrialization, creating the big push, from point A to B.

he below given fgure illustrates the Big Push model of development. Which of the following would NOT be relevant? Q₁ Q₁ B A C) All of the above. C D) None of the above. W₂ L₁ F L/N OA) If the modern sector firm were to enter, it would produce Q 1 units of output. But if they expect other firms will enter, they also enter increasing output to Q2. At output Q2, everyone will make a profit even at W2. OB) If the modern sector firm were to enter, it would produce Q 1 units of output. But it would not enter as its costs would exceed its revenue at W2. 4 E) If agents on their own, or with the encouragement of some coordinator, enter they can initiate industrialization, creating the big push, from point A to B.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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