Assume that workers in a purely competitive industry are earning a wage rate of $15 and the price of the product they are producing is also $15 what does this imply about the marginal productivity of these workers?
What will be an ideal response?
In a purely competitive labor market the wage rate will eventually equal to the marginal revenue product. The marginal revenue product is equal to the price times the marginal productivity of labor. Therefore, the marginal productivity of labor must be equal to one.
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An increase in the price of the U.S. dollar in terms of euros will cause, ceteris paribus,
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