If a firm is a perfect competitor in both it's output market and it's labour market,...
If a firm is a perfect competitor in both it's output market and it's labour market, and they experience and increase in the demand for their product, what will happen to the equilibrium wage?
Homework Answers
It will increase.
If the firm is in a perfect competition and the demand for their product increase they will make a profit and produce more in the short run. for producing more keeping the capital and technology constant only the labor input can be increased. this will increase the demand for the labors and at a higher demand the wages will increase.
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If a firm is a perfect competitor in both it's output market and
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b.
In a. you’ll describe an adaptation process. However, that might
not take place. For what reasons?
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the labour market model
a. Take a look at figure 9.12, the labour market model. Describe
position B. Explain why B is not a Nash equilibrium. What would
happen?
b.
In a. you’ll describe an adaptation process. However, that might
not take place. For what reasons?
Labour supply Average product of labour Real wage Price-setting curve Equilibrium unemployment Demand-deficient or cyclical unemployment, at B Wage-setting curve Total involuntary unemployment, at B Employment, N The Nash equilibrium At point B, total...
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