In figure 1, the x-axis represents the labor employed and the y-axis represents the level of production. The production in the traditional sector is given by the curve T and the production in the modern sector is given by M. The curve M has a positive intercept on the x-axis, implying that even with zero production, there is a minimum level of formula_5 workers who still remain employed for carrying out administrative activities. With our assumption of formula_7 workers in the economy, the modern sector will have a higher level of productivity than the traditional sector. The production function of the modern sector is steeper than that of the traditional sector because of the higher productivity of workers in the former. The slope of both production functions is formula_8, where formula_9 is the marginal labor required to produce an additional unit of output. This level of formula_9 is lower for the modern sector than it is for the traditional sector.