In: Economics
Economic laws have been true throughout human history. As an example, consider the following passage, from Professor Samaddar’s lectures on the economy of Ancient India:
“Weaving in India has been encouraged from time immemorial... As is the case now-a-days, labourers working overtime were given extra payment... and special rewards were given for working on holidays.” (p.117)
Using a supply and demand diagram in the market for labour, clearly explain why Indian workers working overtime or during holidays were paid extra
Skilled laborers play an important role in the flourishment for
waving industries.To improve the productivity and efficiency of the
waving industries the service of skilled workers is very
important.Thus it is important for the weaving industries to
provide incentives for the workers. This can be explained with the
help of labor using demand and supply curve .
In the given figure labor market depicts the changes in the supply
and demand of labor due to changes in the wages.
In the given figure labor demand is a downward slipping curve and
the supply of labor is an upward supply curve.At the wage rate w¹
which is the minimum wage for the laborers the demand for labor is
LD¹ and the supply of labor is LS¹.Here at the minimum wage the
supply of labor exceeds the demand for labor.Now when the workers
of weaving industry decide to work for more hours they sacrifice
their leisure for work that is there is a substitution between work
and leisure.People will prefer more hours of work than the leisure
this the workers are paid high and now the wages of workers
increases from w¹ to w².When there is an increase in the wages the
demand for labor exceeds the demand for supply.