Assigment Economic Essay

1180 Words5 Pages
ECO 162 – MICROECONOMICS ASSIGNMENT 2 Prepared for : Miss Shaliza Azreen Bt. Mohd Zulkifli Prepared by : Amirul Iskandar Bin Amran(2011642138) Mohd Azwan Bin Md Arop(2011432002) Group : BMD2Bh Program : Investment Analysis Question 1 According to theory of distribution,explain how does wage is determined Wages The Theory of distribution Marginal revenue productivity or in other word marginal revenue productivity can know as theory of distribution.theory of distribution seek to explain how the payment or prices to production factors are determined. Factor market Households or individuals own the production factor or resources that firm uses to services and produce goods. Basic kinds of productitive factors is land,capital,labor and lastly entrepreneur are sold and bougtht in the factor market. The payment or in other word the price that household receives for the service of these resources have several names. The form of four factor prices: *wages *rent *interest *profits Wages Every factor of production is rewarded for its services. Wages have two type.The type is: *real wages *nominal wage Real wages Real wages refer to the salary or wage in terms of money or measured in terms of money. *example -if a policeman earns 1200 per month,this refers to his nominal wage or in other word nominal wages are also called money wages Real wages Real wages refer to the purchasing power of money. *example The wages of a policeman is rm 1200 permonth but real means how much the policeman can purchase withthis income Determination of wages To determine the wage rate,firstly we must to know both the market supply of labour and market demand.futhermore,analyse the demand for and the supply of labour. Demand of labour Comes from the firm which hires workers for production.marginal revenue product (mrp) determines the

More about Assigment Economic Essay

Open Document