Question

Which of the following explains the inability of the agricultural sector to absorb labour?

• A. Declining marginal productivity of land
• B. Increasing marginal productivity of land
• C. Declining productivity of labour
• D. Increasing productivity of labour

Answer 1

The correct option is A Declining marginal productivity of land

The declining marginal productivity of land refers to a situation where there is abundant availability of labour, but it does not have any considerable impact on the output. Since land is a fixed input, the addition of labourers makes little difference. This results in declining wages, resulting in higher poverty levels.