This topic contains a solution. Click here to go to the answer

Author Question: A friend tells you that he thinks that the salesmen who work at Apple stores are paid very low ... (Read 108 times)

lak

  • Hero Member
  • *****
  • Posts: 546
A friend tells you that he thinks that the salesmen who work at Apple stores are paid very low wages, given their productivity.
 
  Dividing Apple's revenues by the total number of employees shows that each employee contributed to an average of 473,000 in revenues in 2011 . But, most of Apple's sales staff are paid about 25,000 a year. What is the flaw, if any, in your friend's reasoning?

Question 2

Explain the underlying assumptions of the price leadership model. What conclusions can be made about the price charged and the output produced in an industry that has a dominant price leader?
 
  What will be an ideal response?



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

Kjones0604

  • Sr. Member
  • ****
  • Posts: 327
Answer to Question 1

Your friend is incorrect because the wage that is paid to labor does not depend on the average revenue per employee. In a competitive market, the wage that is paid to a worker will be equal to the value of his marginal product, not the average contribution of all employees in the firm. Apple sales people might be willing to work for a low wage because they enjoy working with technology; that is, the low wages reflect a compensating differential. Combined with the fact that the job is not likely to require a high level of skills or specialized training, the firm can afford to pay wages that are considered low.
See http://www.nytimes.com/2012/06/24/business/apple-store-workers-loyal-but-short-on-pay.html?pagewanted=all

Answer to Question 2

The assumptions are: the industry is made up of one large firm and a number of smaller, competitive firms; the dominant firm maximizes profit subject to the constraint of market demand and subject to the behavior of smaller, competitive firms; and the dominant firm allows the smaller firms to sell all they want to at the price that the leader has set. The price charged and the output produced is between the price set by the perfectly competitive and the monopoly solutions.




lak

  • Member
  • Posts: 546
Reply 2 on: Jun 29, 2018
Wow, this really help


marict

  • Member
  • Posts: 304
Reply 3 on: Yesterday
:D TYSM

 

Did you know?

Barbituric acid, the base material of barbiturates, was first synthesized in 1863 by Adolph von Bayer. His company later went on to synthesize aspirin for the first time, and Bayer aspirin is still a popular brand today.

Did you know?

Many of the drugs used by neuroscientists are derived from toxic plants and venomous animals (such as snakes, spiders, snails, and puffer fish).

Did you know?

In Eastern Europe and Russia, interferon is administered intranasally in varied doses for the common cold and influenza. It is claimed that this treatment can lower the risk of infection by as much as 60–70%.

Did you know?

More than 150,000 Americans killed by cardiovascular disease are younger than the age of 65 years.

Did you know?

Sperm cells are so tiny that 400 to 500 million (400,000,000–500,000,000) of them fit onto 1 tsp.

For a complete list of videos, visit our video library