Suppose That the Wage Is $20 Per Hour in a Two-Sector

question 109

Multiple Choice

Suppose that the wage is $20 per hour in a two-sector (manufacturing and agriculture) specific-factors model. Currently, the prices of manufactured and agricultural outputs are $5 and $1, respectively; the marginal product of labor in the manufactured sector is 6 units per hour; and the marginal product of labor in the agricultural sector is 10 units per hour. What will happen to the distribution of labor between the two sectors?

• A) Nothing will happen. The current allocation of labor between the two sectors is ideal.
• B) The manufacturing sector will demand more labor, and the agricultural sector will demand less labor at the current wage.
• C) The agricultural sector will demand more labor, and the manufacturing sector will demand less labor at the current wage.
• D) Both the agricultural and the manufacturing sector will demand more labor at the current wage.

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Definitions:

Preparedness

The state of being ready and able to deal with future events or emergencies.

Neuroticism

A broad personality trait associated with chronic anxiety, insecurity, and self-consciousness.

Classical Conditioning

A type of learning in which a neutral stimulus acquires the capacity to evoke a response that was originally evoked by another stimulus.

Depressive Disorders

A collection of psychological disorders marked by continuous experiences of melancholy, despair, and an absence of enthusiasm or joy in pursuits.