marginal productivity theory
Not what you're looking for?
Minimum wage legislation requires most firms to pay workers no less than the legislated minimum wage per hour. Using marginal productivity theory, explain how a change in the minimum wage affects the employment of unskilled labor.
Purchase this Solution
Solution Summary
This posting resolves marginal productivity theory.
Solution Preview
In a competitive market factor payments are determined by the productivity of factors of production. Labor is no different. Labor payments, or wages, are determined by the productivity of labor. In a market economy the government can legislate a minimum wage, but they cannot legislate that companies have to hire! When governments change minimum wages they are not changing the productivity of labor.
When firms see minimum wages change, ...
Purchase this Solution
Free BrainMass Quizzes
Basics of Economics
Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.
Pricing Strategies
Discussion about various pricing techniques of profit-seeking firms.
Elementary Microeconomics
This quiz reviews the basic concept of supply and demand analysis.
Economic Issues and Concepts
This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.
Economics, Basic Concepts, Demand-Supply-Equilibrium
The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.