Exploring Derived Demand

1. According to the marginal productivity theory of wages, wages in competitive markets depend on three forces: productivity, the demand for the product, and the supply of labor. Try to decide which of these factors are primarily responsible for the following:

a. The International Lady Garment Workers runs "Buy-American" ads as a way of increasing the earnings of their members.

b. College professors teach pretty much as they did 50 years ago, yet are paid vastly more than they made then.

c. In order to become a barber in some states, people must attend a year of school. Barbers tend to earn more in such states than in states with fewer entry restrictions.

d. Some lawyers earn much more than others who have the same specialties, education, and years of experience.

e. Many sorts of construction work are risky in the sense that the work is not steady and periods of unemployment are common. These sorts of jobs often pay higher wages than similar work that is more stable.

f. Unskilled labor in a Chinese factory is paid much less than unskilled labor in an American factory. Yet the average production per man-hour may be little different.

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