Define the nominal wage rate and the real wage rate. Can the nominal wage rate increase faster than the real wage rate?
What will be an ideal response?
The nominal wage rate is the wage rate measured in current dollars and the real wage rate is the wage rate measured in constant dollars. More generally, the nominal wage rate is the number of dollars received for an hour's work and the real wage rate is the number of goods and services that can be purchased with an hour's work. The nominal wage rate increases faster than the real wage rate when prices are increasing, that is, when inflation occurs.
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Marginal revenue product for labor for any type of firm is
a. the additional revenue that a firm earns when it employs one more unit of labor. b. the additional revenue that a firm earns when it produces one more unit of output. c. the additional cost of employing one more unit of output. d. the difference between the revenue from employing one more unit of labor and the wage rate.
Suppose a business offers a 10% discount on the good x1 that it sells.
a. Illustrate a consumer's before and after-discount budget constraint by modeling x2 as a composite good. b. Suppose you observe only the after-discount consumption decision of the consumer. Can you tell from this information how much revenue the firm is giving up (from this consumer) by offering the discount? If so, illustrate this in your graph. c. Suppose that, instead of the firm offering the 10% discount, the government subsidized consumption of x1 sufficiently to reduce p1 by 10%. Suppose again that you only observe the after-subsidy decision of the consumer. Can you tell how much of a subsidy payment is made to this consumer by the government? If so, illustrate it in your graph. d. Why are your answers to (b) and (c) different? What will be an ideal response?
If the demand for a good is perfectly elastic, the price elasticity of demand is ________ and the demand curve is ________
A) infinite; vertical B) zero; vertical C) zero; horizontal D) infinite; horizontal
Which of the following statements is true of the relationship among the average cost functions?
A) ATC = AFC - AVC B) AVC = AFC + ATC C) AFC = ATC + AVC D) AFC = ATC - AVC