Wage-employment contracts on the labour demand curve are inefficient. For example, compared to the point A...
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Wage-employment contracts on the labour demand curve are inefficient. For example, compared to the point A on the labour demand curve, both parties are better off at point A, which yields higher union utility and higher firm profits. The set of Pareto-efficient wage-employment contracts, called the contract curve and shown as CC, is the locus of points at which a union indifference curve is tangent to a firm isoprofit curve. Because the union indifference curves are downward sloping, this set of tangencies must occur to the right of the labour demand curve, where the firm isoprofit curves are also downward sloping. W W₂ A' D₂ E 3. Refer to Figure 14.6 in the textbook. In your notes (not directly here), fill in this chart answering yes/no and briefly explaining each choice. a Pareto a Pareto Pareto improvement over A? improvement a Pareto improvement over A"? improvement Pareto Efficient? over A'? over B? Is contract A A' A" B n/a n/a n/a n/a Wage-employment contracts on the labour demand curve are inefficient. For example, compared to the point A on the labour demand curve, both parties are better off at point A, which yields higher union utility and higher firm profits. The set of Pareto-efficient wage-employment contracts, called the contract curve and shown as CC, is the locus of points at which a union indifference curve is tangent to a firm isoprofit curve. Because the union indifference curves are downward sloping, this set of tangencies must occur to the right of the labour demand curve, where the firm isoprofit curves are also downward sloping. W W₂ A' D₂ E 3. Refer to Figure 14.6 in the textbook. In your notes (not directly here), fill in this chart answering yes/no and briefly explaining each choice. a Pareto a Pareto Pareto improvement over A? improvement a Pareto improvement over A"? improvement Pareto Efficient? over A'? over B? Is contract A A' A" B n/a n/a n/a n/a
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Managing Operations Across the Supply Chain
ISBN: 978-0078024030
2nd edition
Authors: Morgan Swink, Steven Melnyk, Bixby Cooper, Janet Hartley
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