Question
a) Suppose workers who are fully effective at some task can each produce 20 units of a particular output per hour. Initially, the market wage
a) Suppose workers who are fully effective at some task can each produce 20 units of a particular output per hour. Initially, the market wage rate is $10 an hour and workers only produce 10 units of output per hour. In this case, we have that each effective unit of labor service costs an employer $________. (Do not add $ sign, and do not round).
b)Follows from the previous question - Now, supose that the firm raises the wage to $15 an hour, and workers now produce 20 units per hour. We have that the hourly wage cost per effective unit of labor declines by $_____ (Do not add $ sign, and do not round).
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