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Problem:

A labour analyst once argued:

If you worked 2,000 hours last year at the wage of $10 per hour and manufactured10, 000 units of output, your output per hour is five units – total output divided by the total hours worked. If you average 6units an hour this year, your productivity (output per hour) has raised 20%. Supposing the unit price is $7.50, the same as previous year, and you still get paid $10 per hour, your employer’s labour cost per unit has reduced from $2 to $1.67 per unit. He gets added profits on each unit, so he can afford to share extra profits with his workers.

The analyst’s assertions might be correct but only under particular circumstances. What are these circumstances? describe.

Macroeconomics, Economics

  • Category:- Macroeconomics
  • Reference No.:- M910570

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