LEC 3 ECON 314 01/14/2014
The economy has two sectors – Agricultural & Manufacturing.
The agricultural sector has surplus Labour, suchLAhat MP = 0.
Labour in the agricultural sector share the output equally such that wages are determined by the
average product. We usually determine wages using the marginal product,
however, this is a special case
All wages are consumed and all profits are saved in the manufa