10. micro - Maya Cohen 066370065 Exercise # 10 Reciprocal...

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Maya Cohen 066370065 Exercise # 10 Reciprocal Relationships between Final Product Markets and Production Factors 1. In our case we are dealing with a competitive market where prices are always thriving to be equal. Assuming that workers X and Y are equal in terms of abilities, than they must be receiving the same amount of wages- a change in wages would draw employees to the other section and change the equation to be equal again. Industry X would earn more than industry Y, since their marginal product of labor is higher, and they can afford selling their product at a lower price. According to that assumption we can apply this formula: W= MPL(x) X Px W= MPL(y) X Py So the wages are determined by the price of the product in question, and it affects the wages in perfect compatibility so the wages are always equal. 2. Because we are again dealing with a competitive market we are allowed to use the same formula while using the data: A= input, MPL= X. A=15X20=300= the price of input A. And from here we can assume:
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10. micro - Maya Cohen 066370065 Exercise # 10 Reciprocal...

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