Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Firm's problem ( i . e . maximize profits ) : m a x l , k p Q ( l , k ) -

Firm's problem (i.e. maximize profits):
maxl,kpQ(l,k)-wl-rk
Which lead to the following equations:
pdelQdell=w
pdelQdelk=r
Put another way,
price MPL= wage
price MPK= rental rate of capital (priceof capital)
Part A: One implication of this is that profit maximizing firms should set the marginal revenue product of labor equal to the wage rate. If men and women are equally productive (MPL is the same), is there an argument for a firm wanting to maximize its profit to pay women less? If the labor market is competitive, and female workers were paid less at a specific firm, would you expect them to look for other work and be hired by a different firm?
Part B: Suppose workers who have many years of experience have higher marginal products (i.e. firms depend on them more to produce their product), should profit maximizing firms pay them more?
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles Of Econometrics

Authors: R Hill

4th Edition

1118136969, 9781118136966

More Books

Students also viewed these Economics questions

Question

process diagram for calorie tracker

Answered: 1 week ago

Question

6. Explain the power of labels.

Answered: 1 week ago

Question

5. Give examples of variations in contextual rules.

Answered: 1 week ago

Question

f. What stereotypes were reinforced in the commercials?

Answered: 1 week ago