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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 Rennies VMP = (100 pots)($1.10 - .10) = $100 Lauras VMP = ($120 pots)($1.10 - .10) = $120 Assuming a competitive labor market: z Rennies wage will be $100. z Lauras wage will be $120....
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- Spring '08