Macro Game - Simple Macroeconomy Game Discussion...

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Simple Macroeconomy Game Discussion
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Calculating Real Wage Real wage = Wage / Price
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One Firm’s Problem One Firm s Problem Marginal Product of Labor: 1 st worker: 6 d 7 8 2 nd worker: 5 3 rd worker: 4 4 th worker: 3 5 th worker: 2 ge (W/P) 5 6 6 th worker: 1 7 th worker: 1 etc. Real Wa 3 4 1 2 Demand for labor Labor 1 2 3 4 5 6 7 8
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Two Firms 7 8 Wage (W/P) 5 6 Real W 2 3 4 1 Demand for labor Labor 2 4 6 8 10 12 14 16
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One Worker’s Problem One Worker s Problem Supply of Labor Marginal Utility of Leisure: 1 st unit: 3 2 nd unit: 2 7 8 3 rd unit: 1 ge (W/P) 5 6 Real Wa 3 4 1 2 Labor 1 2 3 4 5 6 7 8
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Four Workers Supply of Labor P) 6 7 8 Wage (W/P 4 5 Real W 2 3 1 Labor 1 2 3 4 5 6 7 8 9 10 11 12
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All Together Now… Supply of Labor P) 6 7 8 Wage (W/P 4 5 Real W 2 3 1 Demand for labor Labor 1 2 3 4 5 6 7 8 9 10 11 12
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Efficiency If you are a benevolent social planner, and you are going to impose your (benevolent) will on the game participants, how many units of labor do you require to be exchanged? A benevolent social planner doesn’t need the red cards – money – or wages and prices. In the
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