Lecture 23-Workers are Paid Their VMP

47 views3 pages
1 Aug 2010
School
Department
Course
Professor
SS
15,000
DD = VMP
w
L
Tuesday, January 12, 2010. Workers are Paid Their VMP
What determines wage rate of:
Day-care workers ($15,000 per year)
Computer programmers ($50,000 per year)
Baseball stars ($5 million per year)
P = MC
Choose q to maximize profits
W = VMP
Choose labour to maximize profits
Insight
,IODERXULVRQO\YDULDEOHIDFWRUWKHQILUP¶VFKRLFHRIRXWSXWLVDOVRWKHILUP¶VFKRLFHRIODERXU
Equilibrium wage (W) is VMP of last worker hired
Day Care Workers
l
SS
w1
DDL = VMP
L
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