FANDOM


Microeconomics Question from Walter E. Williams:Edit

D.H. Robertson divides the effects which "an artificial raising of wages" is apt to have on employment into "two analytically separable reactions"--first, "A movement along the existing marginal productivity curve," and second, "a cumulative lowering of the curve." Explain the two reactions and indicate what assumptions concerning the other factors of production are involved.

AnswerEdit

Labor is an input to production. In the first case, an increase in the price of labor will reduce the amount of labor demanded. Firms will reduce hours, perhaps, to keep costs in line in the short run. In the long run, the demand for labor will shift if the price of labor remains high. Firms will substitute capital for labor in the long run, shifting the demand curve to the right.

Other Questions:Edit

Next: WEW-072
Previous: WEW-070

WEW Questions 61-80
WEW-061WEW-062WEW-063WEW-064WEW-065WEW-066WEW-067WEW-068WEW-069WEW-070
WEW-071WEW-072WEW-073WEW-074WEW-075WEW-076WEW-077WEW-078WEW-079WEW-080

Ad blocker interference detected!


Wikia is a free-to-use site that makes money from advertising. We have a modified experience for viewers using ad blockers

Wikia is not accessible if you’ve made further modifications. Remove the custom ad blocker rule(s) and the page will load as expected.