Answer:
1. a. fewer workers and the total paid out for wages will decline.
Were wages to rise, producers would seek to reduce their input costs to maintain Profitability and so they will hire less people which will result in them paying out less wages.
2. a. greater, the more elastic the demand for the product.
If the price of capital reduces, producers will want to produce more goods as it is cheaper to do so. They will produce more goods as opposed to less if the Elasticity of the good is high so that they will take advantage of the price that the consumers feel comfortable with and sell more.
3. A. MRP = Wage Rate.
Marginal Revenue Productivity should be equal to the Wage Rate in a purely competitive labor market because it shows that the maximum amount is labor is being employed. What this Equilibrium means is that the Incremental amount that the worker is bringing in by working is equal to their wage rate. Any point after this would.mean that the Worker is being overpaid because they are not bringing in enough to justify what they are paid. For points below this point, the reverse is true.
4. b. wage rates at Ajax to be lower than at Acme.
As working for Ajax is more pleasant, people will prefer to work there over Acme. In order for Acme to compensate employees for staying in a place that is not as pleasant, they will have to pay them more so Acme will be paying more than Ajax.
