Chap013.2 - Employment and Productivity in a Woodworking...

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2 Chapter 13: Labor Markets, Poverty, and Income Distribution Slide 7 Employment and Productivity in a Woodworking Company (when P = $20) Number of workers Total number of cutting boards/week VMP ($/week) MP (extra cutting boards/week) 00 13 0 25 5 37 6 49 4 51 0 8 30 600 25 500 21 420 18 360 14 280 Competitive labor market Wage = $350/wk MP reflects diminish returns If VMP > wage continue to hire Adirondack would hire 4 workers At a given wage the number employed depends on: MP of the worker Price of the product Chapter 13: Labor Markets, Poverty, and Income Distribution Slide 8 The Occupational Demand for Labor Employment in firm 1 (person-hours/day) Wage ($/hour) Employment in firm 2 (person-hours/day) D 1 = VMP 1 D 2 = VMP 2 6 12 100 150 6 12 50 100 + + Chapter 13: Labor Markets, Poverty, and Income Distribution Slide 9 The Occupational Demand for Labor Total Employment (person-hours/day) D = VMP 1 + VMP 2 250 150 6 12 = = Chapter 13: Labor Markets, Poverty, and Income Distribution
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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.

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