Assume that the necessary labour time to produce good X is 7 hours and good Y is 5 hours. Use the labour theory of value proposed by Adam Smith to answer the following questions with steps of calculation: a. In an early and rude state, calculate the labour costs and labour commanded of good X and good Y, and their relative prices. p. In an advanced economy, the wage costsare only 0.6 of the final prices. How would the answers in (a) be changed? c. If wage is 0.6 of the final price of good X and is 0.8 of good Y, how would the answers in (b) be changed?

Assume that the necessary labour time to produce good X is 7 hours and good Y is 5 hours. Use the labour theory of value proposed by Adam Smith to answer the following questions with steps of calculation: a. In an early and rude state, calculate the labour costs and labour commanded of good X and good Y, and their relative prices. p. In an advanced economy, the wage costsare only 0.6 of the final prices. How would the answers in (a) be changed? c. If wage is 0.6 of the final price of good X and is 0.8 of good Y, how would the answers in (b) be changed?

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter19: Earnings And Discrimination

Section: Chapter Questions

Problem 3PA

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