Surplus labor theories assume that ?
Correct answer: C. the marginal products of labor is closed to zero in LDCs
- A. LDCs are overpopulated
- B. labor contributes nothing to output in LDCs
- C. the marginal products of labor is closed to zero in LDCs
- D. urban unemployment is high in LDCs
Explanation
Surplus-labour models, especially the Lewis model, assume that a developing economy has excess labour whose marginal product is zero or very close to zero in traditional activities. This permits labour transfers to modern sectors without initially reducing output.
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