According to the neoclassical theory of distribution, a worker's real wage reflects her productivity. Let's use this insight to examine the incomes of two groups of workers: farmers and barbers. Let W, and W, be the nominal wages of farmers and barbers, P, and P, be the prices of food and haircuts, and MPL, and MPL,, be the marginal productivity of farmers and barbers. a. Over the past century, the productivity of farmers (MPL) has risen substantially due to technological progress. According to the neoclassical theory, farmers' real wage (W/P) should have remained constant. increased. fluctuated randomly. decreased.

According to the neoclassical theory of distribution, a worker's real wage reflects her productivity. Let's use this insight to examine the incomes of two groups of workers: farmers and barbers. Let W, and W, be the nominal wages of farmers and barbers, P, and P, be the prices of food and haircuts, and MPL, and MPL,, be the marginal productivity of farmers and barbers. a. Over the past century, the productivity of farmers (MPL) has risen substantially due to technological progress. According to the neoclassical theory, farmers' real wage (W/P) should have remained constant. increased. fluctuated randomly. decreased.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter22: Inflation

Section: Chapter Questions

Problem 25CTQ: Imagine that the government statisticians who calculate the inflation rate have been updating the...

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