Unformatted text preview: product ( VMP ). Chapter 13: Labor Markets, Poverty, and Income Distribution Slide 5 The Economic Value of Work ± How much will Rennie and Laura earn at Mackintosh Pottery? z Price = $1.10/pot in competitive market z Clay, the only input, available at no cost . z Cost = $0.10 handling fee/pot. z Rennie produces 100 pots/wk and Laura produces 120 pots/wk. Chapter 13: Labor Markets, Poverty, and Income Distribution Slide 6 The Economic Value of Work ± Value of Marginal Product z Marginal product of labor x the net price of each unit sold ² Rennie’s VMP = (100 pots)($1.10 - .10) = $100 ² Laura’s VMP = ($120 pots)($1.10 - .10) = $120 ± Assuming a competitive labor market: z Rennie’s wage will be $100. z Laura’s wage will be $120....
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This note was uploaded on 02/20/2012 for the course ECON 202 taught by Professor Brightwell during the Spring '08 term at Texas A&M.
- Spring '08