Consider a country in which there are two sectors, called Sector 1 and Sector 2. The production function in each sector is given by Y_i= L_i^0.5, for i = 1,2. The total number of workers in the economy is L = 1. In sector 1workers are paid in terms of their AP whereas in sector 2 they are paid in terms of MP. Perfect mobility of workers across sector holds true.

i) Calculate and explain how many workers will work in each sector.(2 marks)

ii) Draw a well labeled graph (similar to graph 10.3 on page 283 from text-book) showing AP for sector 1 corresponding to is production function and MP for sector 2 corresponding to sector 2's production function and identify the point of equilibrium indicating the numerical answers obtained in part (i). (3 marks)

Consider a country in which there are two sectors, called Sector 1 and Sector 2. The production function in each sector is given by Yi= Li\10.3 Units of output Marginal product Marginal product of labor in Sector 1 of labor in Sector 2 Labor allocated Labor allocated to Sector 1 to Sector 2