Economics • Economic BasicsHard
What structural implication does the rapid deceleration of total factor productivity in Punjab's intensive cereal rotation model hold for long-term real wage growth?
A. It creates downward pressure on real wages as diminishing returns set in and input costs outpace productivity gains✓ Correct Answer
B. It guarantees exponential increases in real wages due to unlimited supplies of specialized agrarian labor
C. It decouples local wage rates entirely from agricultural commodity prices through industrial automation
D. It ensures automatic wage parity with service-sector hubs across metropolitan India without skill upgradation
💡 Solution & Explanation
When total factor productivity stagnates under mono-cropping, rising fertilizer and power costs compress profit margins, restricting real wage growth for agricultural laborers. Labor supply in Punjab is constrained rather than unlimited, and industrial automation has been localized rather than economy-wide. Wage disparities persist between agrarian sectors and high-end services. Diversification toward horticulture and agro-processing is promoted to counter this stagnation.
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