Q1. L7. Unit 6 – Employment Relationship: [10 marks] a) Use the Labour-discipline model of wage-setting...

Q1. L7. Unit 6 – Employment Relationship: [10 marks] a) Use the Labour-discipline model of wage-setting within the firm to explain how wages are determined. In your answer, show how the employer sets the wage to minimise the cost of effort. [5 marks]

Show, in general, how the best response curve depends on the level of unemployment and the unemployment benefit. Demonstrate, more specifically, how the conditions of the Labour-discipline model affect the employee’s best response function when an improved technology makes her job easier. [5 marks]

Expert Solution

Rahul Sunny answered 2 years ago

What explains the positive relationship between wages and employment that we see with the wage-setting curve?

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