Read the "Clear it Up: Do Profit Maximizing Employers Exploit Labor"Do Profit Maximizing Employers Exploit Labor? (Source: OER) If you look back at the labor dynamics of supply and demand, you will see that only the firm pays the last worker it hires what they’re worth to the firm. Every other worker brings in more revenue than the firm pays him or her. This has sometimes led to the claim that employers exploit workers because they do not pay workers what they are worth. Let’s think about this claim. The first worker is worth $x to the firm, and the second worker is worth $y, but why are they worth that much? It is because of the capital and technology with which they work. The difference between workers’ worth and their compensation goes to pay for the capital, technology, without which the workers wouldn’t have a job. The difference also goes to the employer’s profit, without which the firm would close and workers wouldn’t have a job. The firm may be earning excessive profits, but that is a different topic of discussion.Explain how workers and employers benefit in a voluntary labor market (a market where both sides may enter and leave at their own discretion).What issues might we run into from the profit maximizing firm? 1. Read the "Clear it Up: Do Profit Maximizing Employers Exploit Labor"Do Profit Maximizing Employers Exploit Labor? (Source: OER)If you look back at the labor dynamics of supply and demand, you will see thatonly the firm pays the last worker it hires what they're worth to the firm. Everyother worker brings in more revenue than the firm pays him or her. This hassometimes led to the claim that employers exploit workers because they do notpay workers what they are worth. Let's think about this claim. The first worker isworth $x to the firm, and the second worker is worth $y, but why are they worththat much? It is because of the capital and technology with which they work. Thedifference between workers' worth and their compensation goes to pay for thecapital, technology, without which the workers wouldn't have a job. The differencealso goes to the employer's profit, without which the firm would close andworkers wouldn't have a job. The firm may be earning excessive profits, but that isa different topic of discussion.1. Explain how workers and employers benefit in a voluntary labor market (amarket where both sides may enter and leave at their own discretion).2. What issues might we run into from the profit maximizing firm?

There are many labor markets which are different but economists use the term labor market for all.…

Answered: Do Profit Maximizing Employers Exploit…

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter19: Earnings And Discrimination

Section: Chapter Questions

Problem 8PA

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Read the "Clear it Up: Do Profit Maximizing Employers Exploit Labor"

Do Profit Maximizing Employers Exploit Labor? (Source: OER)

If you look back at the labor dynamics of supply and demand, you will see that only the firm pays the last worker it hires what they’re worth to the firm. Every other worker brings in more revenue than the firm pays him or her. This has sometimes led to the claim that employers exploit workers because they do not pay workers what they are worth. Let’s think about this claim. The first worker is worth $x to the firm, and the second worker is worth $y, but why are they worth that much? It is because of the capital and technology with which they work. The difference between workers’ worth and their compensation goes to pay for the capital, technology, without which the workers wouldn’t have a job. The difference also goes to the employer’s profit, without which the firm would close and workers wouldn’t have a job. The firm may be earning excessive profits, but that is a different topic of discussion.

Explain how workers and employers benefit in a voluntary labor market (a market where both sides may enter and leave at their own discretion).
What issues might we run into from the profit maximizing firm?

1. Read the "Clear it Up: Do Profit Maximizing Employers Exploit Labor"
Do Profit Maximizing Employers Exploit Labor? (Source: OER)
If you look back at the labor dynamics of supply and demand, you will see that
only the firm pays the last worker it hires what they're worth to the firm. Every
other worker brings in more revenue than the firm pays him or her. This has
sometimes led to the claim that employers exploit workers because they do not
pay workers what they are worth. Let's think about this claim. The first worker is
worth $x to the firm, and the second worker is worth $y, but why are they worth
that much? It is because of the capital and technology with which they work. The
difference between workers' worth and their compensation goes to pay for the
capital, technology, without which the workers wouldn't have a job. The difference
also goes to the employer's profit, without which the firm would close and
workers wouldn't have a job. The firm may be earning excessive profits, but that is
a different topic of discussion.
1. Explain how workers and employers benefit in a voluntary labor market (a
market where both sides may enter and leave at their own discretion).
2. What issues might we run into from the profit maximizing firm?

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