The Theory And Monopolistic Competition Minimum Wages

Undertaking general training in the firm by its employees became a normal practice in a modern world. It is seen as an educational program which helps workers to improve their skills and increase their productiveness. Nevertheless, more companies are ready to pay for such an improvement as they are expecting higher profits and a rise in quality. However, such a practice remains controversial and some experts do not believe in its efficiency. Furthermore, another curious tendency observed in a modern world is a regular increase in minimum wages. Most notable economists defend a classical view which states that rise in a minimum wage will inevitably bring higher unemployment and give less chances to young people to find a job. However, according to oligopolistic theory and monopolistic competition minimum wages will eventually lead to higher employment, rather than the opposite. This view will be carefully discussed and analysed in this paper with empirical evidence. Oligopsony is described as a market with few buyers, while monopsonistic competition is â€Å"an oligopsony with free entry, so that employer profits are driven to zero†. Two great examples of such a market structure are a world market of cocoa, where there are only three major firms, which purchase cocoa bean production (Cargill, Archer Daniels Midland and Callebaut), and a tobacco market in United States, where Altria, Brown Williamson and Lorillard Tobacco Company are three major companies which purchase aroundShow MoreRelatedJoseph Schumpeter And Karl Marx : The Philosophy Of Capitalism838 Words   |  4 Pagesmust earn a wage for their labour. In the communist manifesto, Marx lays out a history of class struggle which highlights the capitalist creation of a class of persons, the proletariat, who will eventually begin a revolution that ends the â€Å"exploitation† of their labour. This exploitation is expressed in the appropriation of surplus value by capitalists according to Marx. Surplus value is understood to be the difference between the value of one’s labour in producing a good and the wage that the labourerRead MoreEssay about Eco 561 Final Exam Free1423 Words   |  6 PagesAVC 5) If the wage rate increases, A. a purely competitive producer will hire less labor, but an imperfectly competitive producer will not B. an imperfectly competitive producer will hire less labor, but a purely competitive producer will not [C. a purely competitive and an imperfectly competitive producer will both hire less labor] D. an imperfectly competitive producer may find it profitable to hire either more or less labor 6) The real wage will rise if the nominal wage A. fallsRead MoreImportance Of The Micro Economic Environment1471 Words   |  6 Pagesnot always conform to unique procedures and could not be described by simple mechanisms. This presented a serious methodological difficulty for the theory of price movements. 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