Micro2Solutions

Prep101comfreestuff use the following figure of

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Unformatted text preview: ng figure of markets for high-skilled and low-skilled labour to answer questions 42 and 43: Wage rate 15 SH 12 SL 9 DH 6 DL 3 10 20 30 40 50 Labour Q42. What is the marginal revenue product of skill? a) b) c) d) e) 12 9 7.5 6 3 Solution: c) 7.5 Marginal revenue product of skill= vertical distance between the demand curves for highand low-skilled labour when L= 40, wage offered for low-skilled labour is 4.5 and wage offered for high-skilled labour is 12 MRP of skill = 12 – 4.5 = 7.5 Q43. What is the compensation for cost of acquiring skill? a) b) c) d) e) 12 9 6 4.5 3 Solution: e) 3 Compensation for cost of acquiring skill = vertical distance between the supply curves for high- and low-skilled labour when L= 40, compensation for cost of acquiring skill = 12 –9=3 Page 27 of 33 ©Prep101 www.prep101.com/freestuff Use the following figure to answer questions 44 and 45: S + tax Price $ 50 S 40 30 D2 20 D1 10 20 40 50 60 70 Quantity Q44. Suppose the supply curve of a commodity is given by S....
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This note was uploaded on 08/26/2010 for the course ECON 208 taught by Professor Dickenson during the Fall '07 term at McGill.

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