Part 1: True/False/Explain. For each question, follow these steps. First, define or explain precisely any terms or concepts that are underlined, with a focus on the particular context in which they are being used. Second, state whether the statement is true or false, and explain why. Include diagrams or examples as part of your example, if appropriate. Concise answers are preferred over wordy ones. Lewis model. a. Draw the marginal value product of labor curve in the traditional sector (call this scenario A). Clearly label the curve and the axes of the graph. Include a dotted line for the subsistence level wage. b. Suppose a new labor-saving agricultural technology is introduced (call this scenario B). What would the MVPL curve look like now? Clearly label it on your graph. Describe in words why the graph has changed. c. Draw the graph for the modern sector, and draw one MVPL curve for the modern sector (e.g. assuming one fixed level of capital). d. Draw two labor supply (LS) curves on the new graph, clearly labeled, that correspond to scenarios A and B. Also clearly label the Lewis turning point for each scenario. Describe in words what the Lewis turning point is. e. f. Describe in words what has happened to the Lewis turning point, with the introduction of the labor-saving agricultural technology.
Part 1: True/False/Explain. For each question, follow these steps. First, define or explain precisely any terms or concepts that are underlined, with a focus on the particular context in which they are being used. Second, state whether the statement is true or false, and explain why. Include diagrams or examples as part of your example, if appropriate. Concise answers are preferred over wordy ones. Lewis model. a. Draw the marginal value product of labor curve in the traditional sector (call this scenario A). Clearly label the curve and the axes of the graph. Include a dotted line for the subsistence level wage. b. Suppose a new labor-saving agricultural technology is introduced (call this scenario B). What would the MVPL curve look like now? Clearly label it on your graph. Describe in words why the graph has changed. c. Draw the graph for the modern sector, and draw one MVPL curve for the modern sector (e.g. assuming one fixed level of capital). d. Draw two labor supply (LS) curves on the new graph, clearly labeled, that correspond to scenarios A and B. Also clearly label the Lewis turning point for each scenario. Describe in words what the Lewis turning point is. e. f. Describe in words what has happened to the Lewis turning point, with the introduction of the labor-saving agricultural technology.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Part 1: True/False/Explain. For each question, follow these steps. First, define or explain precisely any
terms or concepts that are underlined, with a focus on the particular context in which they are being
used. Second, state whether the statement is true or false, and explain why. Include diagrams or
examples as part of your example, if appropriate. Concise answers are preferred over wordy ones.
Lewis model.
a. Draw the marginal value product of labor curve in the traditional sector (call this
scenario A). Clearly label the curve and the axes of the graph. Include a dotted line
for the subsistence level wage.
b. Suppose a new labor-saving agricultural technology is introduced (call this scenario B).
What would the MVPL curve look like now? Clearly label it on your graph. Describe in
words why the graph has changed.
c. Draw the graph for the modern sector, and draw one MVPL curve for the modern
sector (e.g. assuming one fixed level of capital).
d. Draw two labor supply (LS) curves on the new graph, clearly labeled, that correspond
to scenarios A and B. Also clearly label the Lewis turning point for each scenario.
e. Describe in words what the Lewis turning point is.
f. Describe in words what has happened to the Lewis turning point, with the
introduction of the labor-saving agricultural technology.
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Step 1: Define Lewis model
VIEWStep 2: Illustrate the graph of VMPL
VIEWStep 3: Illustrate the graph of VMPL after technology
VIEWStep 4: Illustrate the graph of modern sector
VIEWStep 5: Illustrate the graph of turning point
VIEWStep 6: Explain Lewis turning point
VIEWStep 7: Explain impact after Lewis turning point
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