pic Economics for all: Labour Economics

Thursday 25 September 2008

Labour Economics

Why do you divide unearned income between price level? I suppose it gives the quantity of goods purchased. Wage divided by price level multiplied by hours worked gives the quantity of goods purchased. If t-l is h then (w/p)t-(w/p)l is h too because the w/p cancels out. Max income is where total time endowment is multiplied by w/p because this is like working 24/7 but this is absolutely ridiculous and no one will work this much and if they did they would soon die from exhaustion. It is one of many ridiculous aspects of economic theory that probably puts some people off economics but is harmless when understood. Minimum income is therefore at the opposite end of the spectrum and is when some spends no time at all on work and is constantly in leisure 24/7.

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