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What will happen to the equilibrium wage of crop harvesters in Dystopia if the price of the crop falls by 50% and the marginal product of the workers increases by 25%?

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What will happen to the equilibrium wage of crop harvesters in Dystopia if the price of the crop falls by 50% and the marginal product of the workers increases by 25%?

 

Answered Same Day Dec 26, 2021

Solution

David answered on Dec 26 2021
124 Votes
Let W be the equili
ium wage. Now, at the equili
ium wage rate, the workers are hired up
to that unit or number where the following condition is satisfied.
W = Marginal Revenue Product Labour of Worker (MRPL) (1)
Now,
MRPL = Marginal Product of Labour(MPL) X Price...
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