Question

In: Economics

(principles of microeconomics) provide four reasons why some workers receive higher wages than other workers? explain...

(principles of microeconomics) provide four reasons why some workers receive higher wages than other workers?

explain two factors which shift the demabd for labour and two factors which shifts the supply of labour.

explain why the value of the marginal product curve for labour is also the demand for labour curve in a perfcetly competitive labour market

Expert Solution

Answer 1. Workers receive different pay because-

1. Skills and productivity differneces amongst workers. More skills and higher productivity leads to higher wages and vice versa.

2. Relevant work exerience difference. more the experience, more are the wages.

3. Discrimination in wages based on gender, religion ,race etc. Even though the nature of work is same, there are still differences in wages.

4. Workers who receive incentive pay like overtime, holiday pay etc. wilk have higher wages than those who don't have incentive pay.

Answer 2. 2 factors which shift Labor demand-

1. Change in production process- If the new production process involves more machines than labor, labor demand will fall.

2. Change in demand for the product that the labor Produces- If the demand for the product rises, more labor will be demanded to produce that good.

2 factors that leads to shift in labor supply:

1. Change in Income- If the income of labor is too high, worker may decide to increase leisure instead of work.

2. Population- If their is an influx of popution due to migration or immigration, the supply of labor will rise.

Answer 3. Value of marginal product of labor= Marginal product of labor * price of the output of the firm.

Demand for labor is equal to the value of marginal product of labor because maginal product is the additional output a firm can produce by employing one more worker. The valuve of worker is also based on the price of the output they price.

so, demand curve for labor is equak tot he value of marginal product of labor.

Rahul Sunny answered 6 months ago

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