Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

In January, General Motors laid off 2,000 workers. Suppose you are hired as a consultant to estimate the impact of these layoffs on the number

In January, General Motors laid off 2,000 workers. Suppose you are hired as a consultant to estimate the impact of these layoffs on the number of cars that GM will be able to produce this year. To do so, you need to estimate the marginal productivity of workers at GM. You go to the company's web page and learn that the company pays the average worker $140,000 per year and is able to sell the average car for $20,000. If GM has monopsony power (or faces an upward sloping labor supply curve for some other reason), is this enough information to calculate the marginal productivity of workers at the company? If so, how many fewer cars per year will GM be able to produce this year given that it laid off 2,000 workers? If not, what is the most you can say about the marginal productivity of workers at GM given this information?

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

International Development And The Washington Consensus A Pluralist Perspective

Authors: John Marangos

1st Edition

042953485X, 9780429534850

More Books

Students also viewed these Economics questions