Lewis Dual Economy
Consider a Lewis Dual Economy where the manufacturing sector capitalists’ labor demand curve is given by;
W = K – 4L
W is the wage, K is the stock of manufacturing capital and L is the number of workers hired in the manufacturing sector.
Initially, K = 50 and the institutionally fixed wage is 10.
a) How many workers are hired by the manufacturing capitalist?
b) What is the total value of all wages of all the workers in the manufacturing sector?
c) What is the value of capitalists’ income?
d) If the capitalists re-invest all their income to increase capital stock in manufacturing (the value ok K increases by the full amount of the capitalists’ income), how many more workers will get absorbed in the manufacturing sector?
e) What will be the new level capitalists’ income as they hire more workers?
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Consider an economy that can produce two goods, manufactures and
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Consider an economy that can produce two goods, manufactures and
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produced using land and labor. The total supply of labor is 20
units. Given the supply of capital and land, the marginal products
of labors are as follows:
Suppose that the price of manufactures is 2 and the price of
food is 1.
A.Determine graphically and algebraically the wage rate and the
allocation of labor between the two sectors
B.Calculate,...
Please be specific in your answers. Thanks a lot!
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I will give thumbs up!
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