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Author Question: In a market economy, differences in incomes: a. reflect the relative scarcity of resources. b. ... (Read 31 times)

asd123

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on: Jun 30, 2018
In a market economy, differences in incomes:
 a. reflect the relative scarcity of resources.
 b. provide individuals with an incentive to supply resources that are valued by others.
  c. determine the income distribution among market participants.
 d. all of the above are correct.

Question 2

How does value of marginal product (VMP) of labor determine the number of workers a competitive firm will hire?


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amandanbreshears

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Reply #1 on: Jun 30, 2018
Answer to Question 1

d

Answer to Question 2

A firm's goal is to maximize profits. Hiring an extra person-hour increases the employer's profit as long as VMP, which is an employer's demand curve for labor, exceeds the wage. As the supply curve of labor to a competitive firm is horizontal at the market wage rate, the profit-maximizing amount to hire is given by the point where the VMP is equal to the wage rate.


asd123

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Reply 2 on: Jun 30, 2018
Great answer, keep it coming :)

irishcancer18

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Reply 3 on: Yesterday
Excellent

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