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Author Question: Assume that a traffic ticket attorney is no more productive today than he was 10 years ago but he is ... (Read 121 times)

tsand2

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on: Jun 29, 2018
Assume that a traffic ticket attorney is no more productive today than he was 10 years ago but he is now earning 50 more in salary. How do you explain this apparent paradox?
 
  What will be an ideal response?

Question 2

What is a constant-cost industry? What does the long-run industry supply curve look like for a constant-cost industry?
 
  What will be an ideal response?


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ndhahbi

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

Attorneys, like anyone else in the labor market earns a wage that is in line with his marginal revenue product, not his marginal productivity. Even if his productivity has been flat over the last 10 years the price of his services has probably gone up. Over time, as the economy expands, wages and incomes rise and people are likely to have a greater ability and willingness to pay more for these services.

Answer to Question 2

A constant-cost industry is an industry that has no external economies or diseconomies of scale. In this case, the long-run industry supply curve will be horizontal. This occurs because the firms' long-run average cost curves are unaffected by a change in the size of the industry. Therefore minimum long-run average cost is unaffected and the price will be constant.


tsand2

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Reply 2 on: Jun 29, 2018
YES! Correct, THANKS for helping me on my review

kthug

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Reply 3 on: Yesterday
Excellent

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