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Questions › DSE › DSE 2012 › Q25
2 marksMicroeconomics › Factor markets and income distribution › Efficiency wages and human capitalHardabout 4 min

DSE 2012 Question 25: Factor markets and income distribution

The productivity of a labourer depends on his daily wage. In some range of wage, the more he is paid, the better his health and the more work he is able to do in a given day. Suppose that the relationship between productivity and daily wage is as follows. No work is done for wage below Rs. 20 per day. Each rupee earned above 20 increases productivity by 5 units until the daily wage is Rs. 140 per day. Beyond this level of wage, productivity is constant. If a farmer needs to hire labour for a total of 6000 units of work per day, how many labourers is he likely to hire?

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The productivity of a labourer depends on his daily wage. In some range of wage, the more he is paid, the better his health and the more work he is able to do in a given day. Suppose that the relationship between productivity and daily wage is as follows. No work is done for wage below Rs. 20 per day. Each rupee earned above 20 increases productivity by 5 units until the daily wage is Rs. 140 per day. Beyond this level of wage, productivity is constant. If a farmer needs to hire labour for a total of 6000 units of work per day, how many labourers is he likely to hire? (A) 4 (B) 5 (C) 6 (D) 10

Factor markets and income distribution has come up 55 times in 6 exams since 2006.

What this question tests

This question is on Efficiency wages and human capital, part of Factor markets and income distribution in Microeconomics.

Why firms may pay above the market wage, and how schooling affects earnings.

TestStop has 7 past-paper questions on this subtopic.

Practise Factor markets and income distributionMore on Efficiency wages and human capital

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