Question

If the market wage decreases from 30 ($/hr) to 20 ($/hr), what is the decrease inthe net benefit achieved from working in the economy? Can you distinguishbetween two factors at work?

Answer 1

Answer:

Please see below

Explanation:

A. Decreasing the wage rate leads to an increase in the quantity of labor demanded. Which leads to increased production and ultimately can lead to an increase in a firm's profit if other factors are left constant.

B. The two factors at work is demand and supply.

Answer 2

Answer:

Market Wage Rate is the point where total quantity of labor demanded by firms in that market  is equivalent to the quantity of labor supplied in a labor market .

A rise in the wage rate increases the costs of production, hence, firms will raise their selling prices. As the selling prices of the product increases, consumers purchasing power will also reduce and less output will be sold. This implies that less labour will be demanded.

labour more expensive relative to capital when there is a rise in wages makes , firms will prefer to substitute capital for labour. Therefore, less labour will required for production.

The market wage rate which is the wage that the firm actually pays their workers , and it is determined by the  force of market demand and market supply of labor.