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Author Question: If barbers in Mexico are just a productive as their counterparts in the United States then why do ... (Read 72 times)

lb_gilbert

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on: Jun 29, 2018
If barbers in Mexico are just a productive as their counterparts in the United States then why do they earn lower wages?
 
  What will be an ideal response?

Question 2

Refer to Figure 6-1. The demand curve on which elasticity changes at every point is given in
 
  A) Panel A. B) Panel B.
  C) Panel C. D) none of the above graphs.


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Koolkid240

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Reply #1 on: Jun 29, 2018
Answer to Question 1

The reason is that productivity alone does not determine earnings. Productivity times the price that consumers are willing to pay does. This is what is referred to as the marginal revenue product. In Mexico the ability and willingness to pay for a haircut is lower than it is in the United States. That translates into a lower marginal revenue product and lower wages as well.

Answer to Question 2

C


lb_gilbert

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Reply 2 on: Jun 29, 2018
Excellent

mohan

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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