Question

Which factor will NOT shift the labor supply curve?

a change in preferences and social norms

changes in wealth

changes in opportunities

a change in the wage rate

One objection to the marginal productivity theory of income distribution is the existence of large disparities in income between factors of production that should receive the same payment.

True

False

Your boss is trying to decide whether to buy out a rival company and asks for your advice. The boss says that she will buy the rival if there is evidence that the rival is operating inefficiently. (Your company will then improve its efficiency and increase profits.) She will not buy the rival if there is evidence that the rival is already operating efficiently. Your boss gives you the following data on the rival's operations: The average product of labor is 4, the marginal product of the last worker hired is 10, the wage is $20, and the price of output is $5. Based on this information, you should tell your boss to buy the rival.

True

False

Answer 1

1) Answer: Change in opportunity

Change in preference and social norms effects the labour supply curve because if a person want to earn more money they have to work thus changing their labour supply curve.

Change in wage rate also effects the labour supply curve as people will work more hours if they are getting more wage. Thus there will be change in labour supply.

Change in wealth also effects the labour supply as if any increase in wealth will make people to leave work as they feel like settled in life. So than also labour supply curve changes.

2) Answer: True

Yes there is large disparity in FOP as they cannot be constant and cannot be given same payment as depending on the requirements we will use fop . So the income also differs.