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According to the marginal productivity theory of wages, wages are determined by:- a)The demand and supply of labor
- b)The level of education of workers
- c)The amount of capital invested
- d)The level of unemployment
Correct answer is option 'A'. Can you explain this answer?
According to the marginal productivity theory of wages, wages are determined by:
a)
The demand and supply of labor
b)
The level of education of workers
c)
The amount of capital invested
d)
The level of unemployment
|
Amina Ibrahim answered |
According to the marginal productivity theory of wages, wages are determined by the demand and supply of labor. This theory, proposed by economists such as John Bates Clark and Philip Wicksteed, explains how wages are determined in a competitive labor market.
The theory is based on the principle of marginal productivity, which states that an additional unit of input (in this case, labor) will add a certain amount of value to the production process. According to the theory, wages are determined by the value that each additional unit of labor contributes to the production process.
Here is a detailed explanation of why wages are determined by the demand and supply of labor:
1. Demand for Labor:
- The demand for labor is derived from the demand for the goods and services that labor helps to produce.
- As the demand for goods and services increases, firms need to hire more workers to meet the increased production levels.
- When the demand for labor increases, firms are willing to pay higher wages to attract and retain workers.
- On the other hand, if the demand for goods and services decreases, firms may reduce their workforce, leading to a decrease in wages.
2. Supply of Labor:
- The supply of labor is determined by the number of individuals who are willing and able to work at a given wage rate.
- Factors such as population size, demographics, and labor force participation rates influence the supply of labor.
- When the supply of labor is high relative to the demand, there is a surplus of workers, which puts downward pressure on wages.
- Conversely, when the supply of labor is low relative to the demand, there is a shortage of workers, leading to upward pressure on wages.
3. Equilibrium:
- The interaction of the demand and supply of labor determines the equilibrium wage rate in the market.
- At the equilibrium wage rate, the quantity of labor demanded by firms is equal to the quantity of labor supplied by workers.
- If the wage rate is above the equilibrium level, there will be a surplus of labor, and firms may reduce wages to attract more workers.
- If the wage rate is below the equilibrium level, there will be a shortage of labor, and firms may increase wages to attract more workers.
In summary, the marginal productivity theory of wages states that wages are determined by the demand and supply of labor in a competitive labor market. The theory emphasizes the value that each additional unit of labor adds to the production process, and how this value influences the wage rate.
The theory is based on the principle of marginal productivity, which states that an additional unit of input (in this case, labor) will add a certain amount of value to the production process. According to the theory, wages are determined by the value that each additional unit of labor contributes to the production process.
Here is a detailed explanation of why wages are determined by the demand and supply of labor:
1. Demand for Labor:
- The demand for labor is derived from the demand for the goods and services that labor helps to produce.
- As the demand for goods and services increases, firms need to hire more workers to meet the increased production levels.
- When the demand for labor increases, firms are willing to pay higher wages to attract and retain workers.
- On the other hand, if the demand for goods and services decreases, firms may reduce their workforce, leading to a decrease in wages.
2. Supply of Labor:
- The supply of labor is determined by the number of individuals who are willing and able to work at a given wage rate.
- Factors such as population size, demographics, and labor force participation rates influence the supply of labor.
- When the supply of labor is high relative to the demand, there is a surplus of workers, which puts downward pressure on wages.
- Conversely, when the supply of labor is low relative to the demand, there is a shortage of workers, leading to upward pressure on wages.
3. Equilibrium:
- The interaction of the demand and supply of labor determines the equilibrium wage rate in the market.
- At the equilibrium wage rate, the quantity of labor demanded by firms is equal to the quantity of labor supplied by workers.
- If the wage rate is above the equilibrium level, there will be a surplus of labor, and firms may reduce wages to attract more workers.
- If the wage rate is below the equilibrium level, there will be a shortage of labor, and firms may increase wages to attract more workers.
In summary, the marginal productivity theory of wages states that wages are determined by the demand and supply of labor in a competitive labor market. The theory emphasizes the value that each additional unit of labor adds to the production process, and how this value influences the wage rate.
Which of the following is a characteristic feature of land as a factor of production?- a)It is man-made
- b)It earns interest
- c)It is mobile
- d)It is fixed in supply
Correct answer is option 'D'. Can you explain this answer?
Which of the following is a characteristic feature of land as a factor of production?
a)
It is man-made
b)
It earns interest
c)
It is mobile
d)
It is fixed in supply
|
Deepak Iyer answered |
Land as a factor of production refers to natural resources such as water bodies, minerals, and arable land. Unlike labor, capital, and entrepreneurship, which can be increased or decreased, the supply of land is limited and fixed in the short run.
Efficiency in factor utilization can be achieved through:- a)Increasing wages
- b)Decreasing production
- c)Technological advancements
- d)Increasing taxes
Correct answer is option 'C'. Can you explain this answer?
Efficiency in factor utilization can be achieved through:
a)
Increasing wages
b)
Decreasing production
c)
Technological advancements
d)
Increasing taxes
|
|
Deepak Iyer answered |
Efficiency in factor utilization can be enhanced through technological advancements that improve productivity, streamline production processes, and enable better allocation of resources. Technological advancements lead to higher output with the same or fewer inputs, contributing to efficiency.
The reward for labor is known as:- a)Profit
- b)Rent
- c)Wages
- d)Interest
Correct answer is option 'C'. Can you explain this answer?
The reward for labor is known as:
a)
Profit
b)
Rent
c)
Wages
d)
Interest
|
|
Deepak Iyer answered |
Wages represent the compensation or payment received by individuals for their labor or work input in the production process. It is the reward for the physical or mental effort exerted by workers.
Which of the following is an example of factor mobility?- a)A worker changing jobs
- b)A machine breaking down
- c)A company going bankrupt
- d)An increase in consumer spending
Correct answer is option 'A'. Can you explain this answer?
Which of the following is an example of factor mobility?
a)
A worker changing jobs
b)
A machine breaking down
c)
A company going bankrupt
d)
An increase in consumer spending
|
|
Deepak Iyer answered |
Factor mobility refers to the ability of factors of production, such as labor, capital, and entrepreneurship, to move between different uses or locations. A worker changing jobs exemplifies the mobility of labor as a factor of production.
According to the liquidity preference theory, interest rates are determined by:- a)The rate of inflation
- b)The level of investment
- c)The supply of money
- d)The demand for money
Correct answer is option 'D'. Can you explain this answer?
According to the liquidity preference theory, interest rates are determined by:
a)
The rate of inflation
b)
The level of investment
c)
The supply of money
d)
The demand for money
|
|
Deepak Iyer answered |
The liquidity preference theory, proposed by John Maynard Keynes, suggests that interest rates are determined by the demand for and supply of money. When the demand for money exceeds its supply, interest rates tend to rise, and vice versa.
Which of the following is NOT a solution to unemployment in Nigeria?- a)Increasing investment in infrastructure
- b)Encouraging entrepreneurship
- c)Reducing government expenditure
- d)Improving the education system
Correct answer is option 'C'. Can you explain this answer?
Which of the following is NOT a solution to unemployment in Nigeria?
a)
Increasing investment in infrastructure
b)
Encouraging entrepreneurship
c)
Reducing government expenditure
d)
Improving the education system
|
|
Deepak Iyer answered |
Reducing government expenditure is not directly related to solving unemployment. However, increasing investment in infrastructure, encouraging entrepreneurship, and improving the education system can contribute to reducing unemployment by stimulating economic growth, creating job opportunities, and enhancing human capital development.
MCQ: Which of the following is NOT a factor of production?- a)Labor
- b)Capital
- c)Entrepreneurship
- d)Demand
Correct answer is option 'D'. Can you explain this answer?
MCQ: Which of the following is NOT a factor of production?
a)
Labor
b)
Capital
c)
Entrepreneurship
d)
Demand
|
|
Deepak Iyer answered |
Factors of production refer to the resources used in the production process, such as labor, capital, land, and entrepreneurship. Demand, on the other hand, represents the quantity of goods or services that consumers are willing and able to buy at a given price.
Structural unemployment is caused by:- a)Cyclical fluctuations in the economy
- b)Technological advancements
- c)Inadequate aggregate demand
- d)Inefficient production methods
Correct answer is option 'B'. Can you explain this answer?
Structural unemployment is caused by:
a)
Cyclical fluctuations in the economy
b)
Technological advancements
c)
Inadequate aggregate demand
d)
Inefficient production methods
|
|
Deepak Iyer answered |
Structural unemployment occurs when there is a mismatch between the skills or qualifications of workers and the requirements of available jobs due to changes in the structure of the economy. Technological advancements often lead to changes in industries and job requirements, resulting in structural unemployment.
Frictional unemployment occurs when:- a)There is a shortage of skilled workers
- b)Workers are temporarily between jobs
- c)There is a decline in aggregate demand
- d)Workers refuse to work at the prevailing wage rate
Correct answer is option 'B'. Can you explain this answer?
Frictional unemployment occurs when:
a)
There is a shortage of skilled workers
b)
Workers are temporarily between jobs
c)
There is a decline in aggregate demand
d)
Workers refuse to work at the prevailing wage rate
|
|
Deepak Iyer answered |
Frictional unemployment arises when workers are in the process of searching for new employment opportunities or transitioning between jobs. It is a type of unemployment that is considered temporary and occurs even when the economy is functioning well.
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