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economics exam question

i've got 2 do an essay question for tomorrow. its from the ocr june 2002 exam and im stuck:
a) explain the factors which determine the marginal revenue product of labour
b) discuss the extent to which marginal revenue product is the crucial factor in explaining why top soccer players earn so much more than waiters and waitresses.
please help!!

Reply 1

russ

Me too again similar problem (june 2002 European Paper) need some ideas and understanding.

Explain the ways in which competition in the European Unions Single Market may be restricted

Regards and many thanks!

Reply 2

chandni

i've done the 2nd question with nurses instad of waiters but it is pretty much so the same concept...but its at home so i can put it p when i get home.

Reply 3

missparis

hummm..

for 1), is the factor affecting MRP depends on what kind of market structure it is, price taker or price searcher. For price taker, the mariginal revenue equals Price equals Demand. SO mariginal revenue is constant in price taker and only Marginal Product affect MRP. SO for price take MRP= MP.
But for price searcher its different.

for 2) im not sure. But is it because of diminshing mariginal prductivity?
The units of footballer increased is smaller than the units of waitress/waiters. So increase one unit of footballer, the marginal product increases at a larger percentage. But increases the unit of waitresses/waiters to an certian extent, the marginal productivity will start to fall. Then it explain why MRP of footballer and waiters/waitresses differ so much.

Just my little try. hope its useful ^^

Reply 4

jen333

thanks
hardly anyone in my class had done it so its in for after easter now :smile:

any more help would be great though

Reply 5

chandni

this is my "essay"

“Premiership footballers are grossly overpaid in comparison to normal workers.” Discuss this view of the labour market, with reference to relevant economic concepts and diagrams

One of the highest paid premiership footballers is Roy Keane he earns £100,00 per week. Not all premiership footballers receive this much, but the average wage is thousands of pounds per week. In contrast the clinical grading pay scale for NHS nurses in the UK ranged from £10,050 to £33,820 per year. There are several reasons for this.

The first reason is that the marginal revenue productivity of footballers is very high due to gate receipts, merchandising and revenue from television rights is taken into consideration.

Another reason is that when signing a player a club can be expected to take all associated costs into account. As well as wages this includes transfer fees. European legislation which requires freedom of movement for labour has resulted in changes to the transfer system which means that a transfer fee is not payable when a player moves at the end of their contract. When no transfer fee is to be paid, clubs are in a position to pay higher wages in order to secure the services of a player.

The supply of footballers with the talent to play in the premiership is extremely low and inelastic. When labour supply is inelastic, high levels of demand show themselves in higher wages rather than greater employment.

The monopsonist power of the state in relation to the hiring of nurses helps to depress their wages. There are 20 premiership clubs competing for the services of players, in addition to competition from foreign clubs.

The vocational element of nursing leads to nurses being paid less than they otherwise would have to be. The working conditions of footballers are undeniably attractive and part of the reward for their work, but this has no significant effect in increasing supply of premiership players and therefore this does not depress the wage.

Nurses’ unions are reluctant to strike. This lessens their bargaining power. The professional footballers association has rarely had cause to threaten strike action, but their bargaining power would be huge if they did because of their high MRP levels.

The fact the labour is not homogenous is especially apparent in the market for footballers. The special skills some footballers possess enable them to command enormous amounts of money