Question

During the early phases of industrialization, the number of persons engaged in agriculture usually drops sharply, even as agricultural output is growing. Given what you know about production technology and production functions, can you explain this seeming inconsistency?

Answer 1

The addition of capital delays how quickly labor's returns become diminishing

Step-by-step explanation:

It is widely known that when outputs such as agricultural produce increases, the number of employment in form of labor and other skilled workers increases. In addition, a decrease in output will lead to reduction in employment. However, in the industrialization early stage, increase in output lead to decrease in employment because the addition of capital slows down the rate of labor's returns.