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Principles of Microeconomics Essay Example

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Principles of Microeconomics

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Principles of Microeconomics. The theory put in place here is the Theory of Labor Supply. It states that supply of labor as the number of workers willing to and able to work for a specific wage rate in a given industry. The supply and demand of labor is often fundamental to any process of production. The schedule is a relationship between the current wage rate and the number of workers available for the wage rate. A sloped supply graph here will represent a stagnancy of specialized resources. If a market is perfectly competitive, the profit is maximized by producing at a price equal to the producer’s marginal cost curve.In normal circumstances, a rise in the wage of workers leads to a rise in the production sine it gives the worker motivation to work harder.

However, when the increment is excessive, the opposite happens. The worker becomes lazy leading to low production. This theory at the same time includes child labor which is a thing of the past. In this state, two equilibriums can be reached. When the child’s wage is increased, the production will also increase. This theory also denotes cheap labor which is available in some places. This theory studies the relation in the state that the change in labor and the change in the rate at a given point in time.Elasticity of labor supply is important. Elasticity measures the extent of impact caused by the alteration of the minimum wage on the labor supply at a given point. Most of the time, cheap labor is expected in the in low scale production. This implies that labor is readily available at a fairly low rate of wage. However, in occupations that required skilled labor, the supply is not elastic.In macroeconomics, it analyses the number of employees available and are ready to work for the amount offered and agreed on. It combines the employed labor and new recruits alongside the unemployed. The amount of output depends on the available labor. Production can be increased by increasing the total supply of labor.Relating the theory and the experiment conducted, the wages paid to the workers was the main focus and constant. The number of workers was a variable. The theory helps in the conducting of the experiment by showing how much wage is paid to the workers and the type of work they do. The end result of this experiment is meant to be based on how much the product of the output will be. In the case of the first session, the amount of produce will not be a lot. This is because they are paying the workers on. Principles of Microeconomics.

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Work Cited

Rittenberg, Libby. & Tregarthen, Timothy. Principles of Microeconomics. New York: Flat World Knowledge, 2008.
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