Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The workers could claim that their marginal product is high, after all the capital expenditures and so they should be earning high wages. This claim
The workers could claim that their marginal product is high, after all the capital expenditures and so they should be earning high wages. This claim is completely irrelevant by itself because it is not the case that the MARGINAL product is high, only that average product is high, and the spot market model does not tell us that firms should pay when average product is high. The essence of the spot market model is that you should pay resources for their scarcity value, so that unless there is a scarcity of workers for New Yorker, they should not be rewarded much. If, on the other hand, their talent is harder to replace than other journalists, then it becomes a reason for paying more
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started