To the neoclassical theory of distribution, the real wage earned by any worker equals that worker”s marginal productivity. Let”s use this insight to examine the incomes of two groups of workers: farmers and barbers. A. Over the past century, the productivity of farmers has risen substantially because of technological progress. According to the neoclassical theory, what should have happened to their wage? If farmers have a Cobb-Douglas production function, and A increases, then the MPL also increases. Given a constant supply of farmers, their real wage increases to match the higher MPL. B. In what units is the real wage in part (a) measured? The wage should be measured in terms of what the farmers” produce will purchases from other producers. C. Over the same period, the productivity of barbers has remained constant. What should have happened to their real wage? Given a constant MPL, barbers should have experienced no wage change. D. In what units is the real wage in part (c)
https://webpala.com/wp-content/uploads/2021/03/logo.png 0 0 developer https://webpala.com/wp-content/uploads/2021/03/logo.png developer2023-04-27 12:56:152023-04-27 12:56:15To the neoclassical theory of distribution, the real wage earned by any worker equals that worker”s marginal productivity. Let”s use this insight to…
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