Graphically show the impact on real wage or the real price of capital of each of...

Graphically show the impact on real wage or the real price of capital of each of the following situations in the marginal product model:
a. Improved healthcare policies boost worker productivity
b. Factories go unused (just sit empty) during a recession

Solutions

Expert Solution

The marginal product model explains that any change in the price level of any product, service, and other things will affect its quantity demanded of such products by the people.

Improved healthcare policies boost worker productivity

Due to improved healthcare policies, labor becomes more productive as they are working with better health than earlier. As the productivity of labor increases, a firm can produce more output units in the market due to which producers demand more labor to grow their business. Hence, the labor demand curve shifts rightward as which in the graph below:

Increased demand for labor increases the wage rate in the economy.

Factories go unused (just sit empty) during a recession

Due to recession, demand for products and services decreases as people have lesser money to spend due to the slowing down of the economy. As a result, factories go unused, and no products and services produced. Therefore, it will affect demand for both labor and capital as factories go unused; demand for both will decrease as shown in the graphs below:

Due to decreased demand, demand curve of both labor and capital shifts leftward, and the wage rate and the real price of capital will decrease in the economy that is shown in the graphs above, respectively.

Rahul Sunny answered 4 weeks ago

Next > < Previous

Related Solutions

Using the neoclassical theory of distribution, predict the impact on the real wage and the real...

Using the neoclassical theory of distribution, predict the impact on the real wage and the real rental price of capital of the following question. The government tries to improve the welfare of workers by imposing a binding minimum wage (i.e. a wage floor above the wage that would prevail in the absence of such a policy). MAKE SURE TO SHOW THE GRAPH

Assume that the real wage in an economy is held above equilibrium. a. Graphically illustrate how...

Assume that the real wage in an economy is held above equilibrium. a. Graphically illustrate how an increase in technology that raises the demand for labor will cha number of unemployed workers. Be sure to label the axes and the quantities of labor hired and after the technological progress. b. Explain in words what happens to the number of unemployed as a result of this change.

Use the hedonic wage model to show graphically why a male-female wage differential might emerge, independent...

Use the hedonic wage model to show graphically why a male-female wage differential might emerge, independent of skill differences or gender discrimination.

Graphically illustrate (using the Wage setting and Price setting relations) and explain the effects of an...

Graphically illustrate (using the Wage setting and Price setting relations) and explain the effects of an increase in the minimum wage on the equilibrium real wage, the natural rate of unemployment, the natural level of employment, and the natural level of output. . Based on your understanding of the labor market model presented by Blanchard (i.e., the WS and PS relations), explain what types of policies could be implemented to cause a reduction in the natural rate of unemployment.

Show graphically how an increase in the minimum wage might affect unemployment in (i) a perfectly...

Show graphically how an increase in the minimum wage might affect unemployment in (i) a perfectly competetive market and (ii) a labor market characterized by monopsony.

1) Show the classical view of minimum wage graphically and explain what is being shown (in...

1) Show the classical view of minimum wage graphically and explain what is being shown (in detail with an example) 2) Show the "so-called" exploitation (i.e new monopsonistic) view of minimum wage graphically and explain what is being shown (in detail with an example).

Graphically illustrate the impact of the following events on real GDP per capita in a balanced-...

Graphically illustrate the impact of the following events on real GDP per capita in a balanced- growth-path equilibrium. Keep in mind that the Solow model graph provides qualitative predictions for variables such as real GDP per effective worker (y), and that real GDP per capita is given by Y/L = A × y. a) For the first time in modern history, the birthrate in Japan falls below the mortality rate. (5 points) b) A megathrust earthquake, much like the 2004...

Using the AS-AD model, show how the following events will impact real GDP and price level...

Using the AS-AD model, show how the following events will impact real GDP and price level in Canada: 1) USA is a big purchaser of Canadian goods and there is a boom in the U.S. economy 2) The Canadian exchange rate goes up (i.e. CAD dollar becomes stronger) 3) Due to Toronto Raptors winning the NBA, there is a rise in popularity of Canadian goods in foreign countries 4) The Indian government reduces trade restrictions on Canadian goods

Use supply and demand to explain and show the following real-world situations graphically and in a...

Use supply and demand to explain and show the following real-world situations graphically and in a short paragraph. Be sure to explain what happens to the market quantity and price with a supply and demand diagram as precisely as possible. a) The cost of producing sport utility vehicles (SUVs) decreases because tariffs are reduced on the steel and aluminum used to produce these vehicles. Explain what happens to the market quantity and price of SUVs. b) The fungus Fusarium destroys...

In the model with uncertainty and capital, how is the equilibrium real wage determined?

In the model with uncertainty and capital, how is the equilibrium real wage determined?a It will adjust so that equilibrium profits equal zero.b It will equal the marginal product of labour.c It will adjust so that output equals consumption.d It will equal the marginal rate of substitution between consumption and leisure for the household.

Subjects