Folks,
Good discussion today in class. I gave it a check. Two main points:
1) Wages, like prices, convey information about scarcity and alternatives both to a producer (who demands labor) and to a worker (who supplies labor). In the case of a producer there are choices between productive resources (land, labor, capital, management) and even between different levels of those resources (having Darelle Revis as your cornerback vs Aqib Talib will depend on other assets of your team). In the case of the worker, wages can indicate to me how I ought to use my current skills or whether I should invest to obtain other skills. In any case, both supply and demand are incentivized and affected by wages.
2) Productivity depends not just on the individual but on the resources and people who surround them. Additionally, wages OUGHT to reflect the productivity of one person versus another but such things are notoriously hard to see precisely because productivity is SO dependent upon outside factors. The choices between what productive resources to use will (as stated above) be affected by how each additional unit will affect productivity overall. In other words the opportunity cost of the next unit of any resource matters. Having 3 hammers and one person just will not increase productivity and so, due to increasing opportunity costs, the producers decision on which resource to employ next will change based on what I currently have.
For next time I'd like you to read one on the following sections:
-Job Security: BE 235-244 & 249-251 (Skip Informal Minimum Wages)
-Collective Bargaining: BE 251-260
-Working Conditions: BE 260-267
Pull out one (or two) sentence(s) which you think defines the reading or is key to Sowell's point.
-ie (and you can't use this!) in the Collective Bargaining section Sowell says: "In general, employers cannot simply make whatever arbitrary decisions they which when there is a competitive market for labor and for the products they sale."
Finally, complete the worksheet here: K:\DF\DFEG\Economics\Econ201\Fall 2013\Balser titled "worksheet-due lesson 19.docx"
Good discussion today in class. I gave it a check. Two main points:
1) Wages, like prices, convey information about scarcity and alternatives both to a producer (who demands labor) and to a worker (who supplies labor). In the case of a producer there are choices between productive resources (land, labor, capital, management) and even between different levels of those resources (having Darelle Revis as your cornerback vs Aqib Talib will depend on other assets of your team). In the case of the worker, wages can indicate to me how I ought to use my current skills or whether I should invest to obtain other skills. In any case, both supply and demand are incentivized and affected by wages.
2) Productivity depends not just on the individual but on the resources and people who surround them. Additionally, wages OUGHT to reflect the productivity of one person versus another but such things are notoriously hard to see precisely because productivity is SO dependent upon outside factors. The choices between what productive resources to use will (as stated above) be affected by how each additional unit will affect productivity overall. In other words the opportunity cost of the next unit of any resource matters. Having 3 hammers and one person just will not increase productivity and so, due to increasing opportunity costs, the producers decision on which resource to employ next will change based on what I currently have.
For next time I'd like you to read one on the following sections:
-Job Security: BE 235-244 & 249-251 (Skip Informal Minimum Wages)
-Collective Bargaining: BE 251-260
-Working Conditions: BE 260-267
Pull out one (or two) sentence(s) which you think defines the reading or is key to Sowell's point.
-ie (and you can't use this!) in the Collective Bargaining section Sowell says: "In general, employers cannot simply make whatever arbitrary decisions they which when there is a competitive market for labor and for the products they sale."
Finally, complete the worksheet here: K:\DF\DFEG\Economics\Econ201\Fall 2013\Balser titled "worksheet-due lesson 19.docx"
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