18 Questions
What is the term used to describe the point where the marginal product of rural labor is no longer zero?
Lewis turning point
What is the result of the structural transformation of the economy in the Lewis model?
The balance of economic activity shifts from traditional rural agriculture to modern urban industry
What is a criticism of the Lewis model's assumption about urban labor markets?
The assumption of a competitive labor market
According to the Lewis model, what happens to the labor supply curve as modern-sector wages and employment continue to grow?
It becomes positively sloped
What is a flaw in the Lewis model's assumption about labor transfer and employment creation?
It assumes a proportional rate of labor transfer to modern-sector capital accumulation
What is a consequence of the Lewis turning point on food production?
Food production decreases
What is a key aspect of structural-change theory in transforming underdeveloped economies?
Transforming from agriculture to modern, urbanized, and industrial economy
What is a main idea behind the Lewis Theory of Economic Development?
Promoting industrialization by absorbing surplus labor from the agricultural sector
What is a characteristic of the 'patterns of development' empirical analysis by Hollis B. Chenery and his coauthors?
An empirical analysis of development patterns
What is a key factor lacking in many underdeveloped economies, according to the text?
All of the above
What is a goal of the structural-change approach to development?
Transforming to a modern, urbanized, and industrially diverse economy
Who formulated a well-known theoretical model of development that focused on the structural transformation of a primarily subsistence economy?
W. Arthur Lewis
Why may urban dwellers' demand be more concentrated in manufactured goods?
Food must be processed to prevent spoilage during transportation
What is necessary for achieving industrialization?
A big push to urbanization
How does an investing firm lower its own costs by using infrastructure?
By contributing indirectly to lowering the average cost of infrastructure use
What is a characteristic of infrastructure such as roads, railroads, and ports?
It is not tradable across regions
Why is there underinvestment in training facilities?
Because entrepreneurs know that the workers they train may be enticed away by rival firms
Why is there too little demand by workers for training?
Because they do not know what skills to acquire
Understand the concept of the Lewis turning point in economic development, where the labor supply curve becomes positively sloped as modern-sector wages and employment grow. Learn about the structural transformation of the economy and its impact on labor and production.
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