Question#01

Answer:

The Dual Sector Model, commonly referred to as the Lewis Model, is a Developmental
Economics theory that describes how a developing economy grows by describing the movement
of labor between two sectors: a traditional agricultural sector and a contemporary/modern
industrial sector.

Traditional Agriculture Sector is often characterized by low wages, a surplus of labor, and low
productivity due to a labor-intensive production method.
Contemporary/Modern Industrial Sector is a capital-intensive production process, investment and
capital development in this industry are theoretically feasible over time as capitalists' profits are
reinvested in the capital stock.
 
The improvement of labor's marginal productivity in the agriculture sector is of low priority
because the hypothetical developing country's investment is flowing toward the manufacturing
sector's physical capital stock.
Question#02

Answer:

One hundred is an employability

100 x 0.5=50 isb employability
20 x 5=100 ; 10 x 2=20 L
10 x 5=50.;10 x 1=10 L
10 x 10=100is total output
Q a) The amount of food produced:
Ans)
Food production of:
1 ¿100 x 0.5=50 output
2 ¿ 0.5 x 10=5 ,∧¿
3 ¿ 50/5=10 quantities
Q b) Wage earned by each worker:
Ans)
50/3=16.66 ,17 /10=1.70
Q c) The surplus that can be used in the farm:
Ans) A= 100
100−50=50 ; 50/ 10=5
25 x 2=50
Hence , 25 x 5=125
125−50=75
i ¿15 x 5=75
ii ¿ 5 Quantity is surplus
iii ¿ 5 x 5=$ 25 
Conclusion:
There are ten quantities at price of $5, the surplus of five quantity is calculated. Each worker
wage is $1.70 (3workers).
Question#03

Answer:

The maximum rent that Paul can charge Peter is ten euros.

Explanation:

 Paul's production function for his land is Y -h^0-h^0.5. This means that his output, Y, is
equal to the number of hours he works, h, minus h to the power of 0.5. The price of his
output, p, is ten. If Paul were to offer Peter a fixed rent contract for the plot, the
maximum rent he could charge would be ten euros. This is because, under the terms of
the contract, Peter would be working for Paul and would not be able to sell his output. As
such, the only income he would receive would be his wages, which would be one euro
per hour.
 Given that Paul's production function is Y -h^0-h^0.5, this means that his output would
be decreasing as he increased the number of hours he worked. This is because, as h gets
larger, h to the power of 0.5 becomes a larger number, and this number is subtracted from
Y. As such, there is a point at which it is not worth Paul's while to work any longer, as he
would be losing money.
 At this point, Paul's output would be at its maximum and, as such, the maximum rent he
could charge Peter would be ten euros. This is because, if he were to charge any more,
Peter would not be able to make a profit and would therefore not be willing to work for
him. In summary, the maximum rent that Paul can charge Peter is ten euros.