Recall the analysis of pollution costs in the previous chapter. How would pollution considerations--cleanup costs resulting from increased use of insecticides and chemical fertilizers in Zambia--affect Zambian farm wage rates? Hint: Consider price changes resulting from shifts in the supply curve in the farm-goods market.
Answer to relevant QuestionsWhat is the relationship between a firm's marginal labor cost and the industry's supply curve of labor? Show what happens to the demand curve for labor when the price of gloves falls to $6. What happens when the price increases to $20? Discuss the trade-offs unions face negotiating for higher wage rates and levels of employment. If you know how wage rates are determined, you should know how interest rates are determined. The same tools apply. Discuss. Winning an Olympic gold might generate more gold than the medal. Explain.
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