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Hello, I got stuck on this question, could someone please briefly tell me what they would write for this question:

Explain how marginal revenue product can help to determine both wage rates and employment in particular occupations (15 marks)
Original post by skr1
Hello, I got stuck on this question, could someone please briefly tell me what they would write for this question:

Explain how marginal revenue product can help to determine both wage rates and employment in particular occupations (15 marks)

Basically marginal revenue product is made up of skills, qualifications, experience. I would think for both wage rates and employment to be determined by MRP it would be for the highly skilled occupations, so lets say doctors. To become a doctor you need a high MRP (high qualifications, skills) and doctors are paid highly because of their high MRP. Thus MRP has determined these 2 factors. I would evaluate this point by talking about the vocational elements of being a doctor to round of the paragraph basically, a counterpoint to why doctors could possibly not be paid according to MRP (going against theory). I would draw a diagram that has a inelastic labour supply curve to show how the high MRP that is required to be a doctor then show that a shift in demand causes a huge increase in price which backs up the point of a doctor being paid according to their MRP.
Reply 2
thanks so much!
Original post by Tamim5907
Basically marginal revenue product is made up of skills, qualifications, experience. I would think for both wage rates and employment to be determined by MRP it would be for the highly skilled occupations, so lets say doctors. To become a doctor you need a high MRP (high qualifications, skills) and doctors are paid highly because of their high MRP. Thus MRP has determined these 2 factors. I would evaluate this point by talking about the vocational elements of being a doctor to round of the paragraph basically, a counterpoint to why doctors could possibly not be paid according to MRP (going against theory). I would draw a diagram that has a inelastic labour supply curve to show how the high MRP that is required to be a doctor then show that a shift in demand causes a huge increase in price which backs up the point of a doctor being paid according to their MRP.

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