Using the theory of wage determination, explain why wages in developing countries, where levels of capital are small, are typically quite low
Wages are determined by the value of workers to firms. In many developing countries, the level of capital is quite small, and so worker productivity is quite low. Workers are not able to contribute as much value to a firm as their counterparts in countries that have more capital to complement their labor efforts. Since marginal productivity is low, wages are low.
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Suppose the demand curve for bus travel is downward sloping, and the income elasticity of demand for bus travel is negative.
(i) Design an indifference curve-budget line diagram showing the substitution and income effects created when the price of bus travel falls. In your diagram, place bus travel on the horizontal axis and all other goods on the vertical axis. (ii) How you can tell from your diagram that the income elasticity of demand for bus travel is negative? Explain.
A compensation program that includes all performance indicators that influence an employee's effort is called the:
A. risk-sharing premium. B. informativeness principle. C. efficient bargaining solution. D. incentive coefficient.
Define the natural rate of unemployment and cyclical unemployment
The approach to understanding the determination of real GDP and the price level that emphasizes flexible wages and prices and competitive markets is
A. the Keynesian model. B. Adam Smith's Law. C. Murphy's Law. D. the classical model.